Garmin (GRMN) 10-Q 2024 Q3 Quarterly report

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 28, 2024

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 October 25, 2024

Registered Shares, $0.10 par value: 192,024,969 (excluding treasury shares)

Garmin Ltd.

Form 10-Q

Quarter Ended September 28, 2024

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 39-Weeks ended September 28, 2024 and September 30, 2023 (Unaudited)	1
	Condensed Consolidated Statements of Comprehensive Income for the 13-Weeks and 39-Weeks ended September 28, 2024 and September 30, 2023 (Unaudited)	2
	Condensed Consolidated Balance Sheets at September 28, 2024 and December 30, 2023 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the 39-Weeks ended September 28, 2024 and September 30, 2023 (Unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Equity for the 13-Weeks and 39-Weeks ended September 28, 2024 and September 30, 2023 (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	23
Item 4.	Controls and Procedures	23
Part II - Other Information		24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	25
Item 6.	Exhibits	26
Signature Page		27

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					39-Weeks Ended
	September 28, 2024		September 30, 2023			September 28, 2024		September 30, 2023
Net sales	$	1,586,022	$	1,277,531		$	4,474,342	$	3,745,751
Cost of goods sold		634,423		548,962			1,857,712		1,604,945
Gross profit		951,599		728,569			2,616,630		2,140,806
Research and development expense		249,162		221,572			734,848		667,451
Selling, general and administrative expenses		264,962		236,628			803,869		721,649
Total operating expense		514,124		458,200			1,538,717		1,389,100
Operating income		437,475		270,369			1,077,913		751,706
Other income (expense):
Interest income		28,830		19,803			83,143		54,461
Foreign currency gains (losses)		18,131		(11,539	)		15,584		6,946
Other income		1,814		938			2,623		4,206
Total other income (expense)		48,775		9,202			101,350		65,613
Income before income taxes		486,250		279,571			1,179,263		817,319
Income tax provision		87,139		22,328			203,560		69,810
Net income	$	399,111	$	257,243		$	975,703	$	747,509
Net income per share:
Basic	$	2.08	$	1.34		$	5.08	$	3.91
Diluted	$	2.07	$	1.34		$	5.06	$	3.90
Weighted average common shares outstanding:
Basic		192,201		191,435			192,055		191,409
Diluted		193,171		191,868			192,940		191,772

See accompanying notes.

1

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)

	13-Weeks Ended					39-Weeks Ended
	September 28, 2024		September 30, 2023			September 28, 2024			September 30, 2023
Net income	$	399,111	$	257,243		$	975,703		$	747,509
Foreign currency translation adjustment		62,176		(48,342	)		(17,199	)		(56,793	)
Change in fair value of available-for-sale marketable securities, net of deferred taxes		25,123		2,815			32,118			10,499
Comprehensive income	$	486,410	$	211,716		$	990,622		$	701,215

See accompanying notes.

2

Garmin Ltd. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

	September 28, 2024			December 30, 2023
Assets
Current assets:
Cash and cash equivalents	$	2,009,361		$	1,693,452
Marketable securities		414,701			274,618
Accounts receivable, net		922,034			815,243
Inventories		1,505,536			1,345,955
Deferred costs		23,385			16,316
Prepaid expenses and other current assets		334,488			318,556
Total current assets		5,209,505			4,464,140
Property and equipment, net of accumulated depreciation of $1,120,096 and $1,030,588		1,220,113			1,224,097
Operating lease right-of-use assets		137,665			143,724
Noncurrent marketable securities		1,106,532			1,125,191
Deferred income tax assets		787,849			754,635
Noncurrent deferred costs		7,994			11,057
Goodwill		611,884			608,474
Other intangible assets, net		168,230			186,601
Other noncurrent assets		97,960			85,650
Total assets	$	9,347,732		$	8,603,569
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	374,025		$	253,790
Salaries and benefits payable		218,941			190,014
Accrued warranty costs		57,983			55,738
Accrued sales program costs		75,802			98,610
Other accrued expenses		222,925			245,874
Deferred revenue		113,049			101,189
Income taxes payable		227,735			225,475
Dividend payable		288,204			139,997
Total current liabilities		1,578,664			1,310,687
Deferred income tax liabilities		104,996			114,682
Noncurrent income taxes payable		16,864			16,521
Noncurrent deferred revenue		30,227			36,148
Noncurrent operating lease liabilities		109,832			113,035
Other noncurrent liabilities		602			436
Stockholders’ equity:
Common shares (194,901 and 195,880 shares authorized and issued;     192,136 and 191,777 shares outstanding)		19,490			19,588
Additional paid-in capital		2,218,170			2,125,467
Treasury shares (2,765 and 4,103 shares)		(243,994	)		(330,909	)
Retained earnings		5,563,576			5,263,528
Accumulated other comprehensive income (loss)		(50,695	)		(65,614	)
Total stockholders’ equity		7,506,547			7,012,060
Total liabilities and stockholders’ equity	$	9,347,732		$	8,603,569

See accompanying notes.

3

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	39-Weeks Ended
	September 28, 2024			September 30, 2023
Operating Activities:
Net income	$	975,703		$	747,509
Adjustments to reconcile net income to net cash provided by    operating activities:
Depreciation		102,343			98,483
Amortization		30,849			33,751
Gain on sale or disposal of property and equipment		(48	)		(50	)
Unrealized foreign currency (gains) losses		(25,486	)		9,927
Deferred income taxes		(53,966	)		(90,214	)
Stock compensation expense		101,039			66,214
Realized loss on marketable securities		29			56
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net of allowance for doubtful accounts		(103,567	)		(54,756	)
Inventories		(163,865	)		111,459
Other current and noncurrent assets		(47,413	)		28,288
Accounts payable		124,315			55,340
Other current and noncurrent liabilities		(6,987	)		430
Deferred revenue		5,885			7,063
Deferred costs		(3,987	)		(1,152	)
Income taxes		13,737			(102,024	)
Net cash provided by operating activities		948,581			910,324
Investing activities:
Purchases of property and equipment		(108,869	)		(144,876	)
Purchase of marketable securities		(363,783	)		(116,039	)
Redemption of marketable securities		277,334			145,094
Net cash from (payments for) acquisitions		5,011			(150,853	)
Other investing activities, net		(458	)		(1,018	)
Net cash used in investing activities		(190,765	)		(267,692	)
Financing activities:
Dividends		(428,373	)		(419,166	)
Proceeds from issuance of treasury shares related to equity awards		24,530			21,946
Purchase of treasury shares related to equity awards		(16,313	)		(9,397	)
Purchase of treasury shares under share repurchase plan		(29,278	)		(79,533	)
Net cash used in financing activities		(449,434	)		(486,150	)
Effect of exchange rate changes on cash and cash equivalents		7,536			(12,854	)
Net increase in cash, cash equivalents, and restricted cash		315,918			143,628
Cash, cash equivalents, and restricted cash at beginning of period		1,694,156			1,279,912
Cash, cash equivalents, and restricted cash at end of period	$	2,010,074		$	1,423,540

See accompanying notes.

4

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the 13-Weeks Ended September 28, 2024 and September 30, 2023

(In thousands)

	Common Shares		Additional Paid-In Capital			Treasury Shares			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at July 1, 2023	$	19,588	$	2,077,540		$	(322,688	)	$	4,464,682		$	(115,300	)	$	6,123,822
Net income		—		—			—			257,243			—			257,243
Translation adjustment		—		—			—			—			(48,342	)		(48,342	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $686		—		—			—			—			2,815			2,815
Comprehensive income																211,716
Dividends		—		—			—			(370	)		—			(370	)
Issuance of treasury shares related to equity awards		—		—			—			—			—			—
Stock compensation		—		22,817			—			—			—			22,817
Purchase of treasury shares related to equity awards		—		—			—			—			—			—
Purchase of treasury shares under share repurchase plan, including any associated excise tax		—		—			(8,705	)		—			—			(8,705	)
Cancellation of treasury shares		—		—			—			—			—			—
Share capital currency change		—		—			—			—			—			—
Balance at September 30, 2023	$	19,588	$	2,100,357		$	(331,393	)	$	4,721,555		$	(160,827	)	$	6,349,280
	Common Shares		Additional Paid-In Capital			Treasury Shares			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at June 29, 2024	$	19,490	$	2,183,158		$	(223,899	)	$	5,164,227		$	(137,994	)	$	7,004,982
Net income		—		—			—			399,111			—			399,111
Translation adjustment		—		—			—			—			62,176			62,176
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $8,613		—		—			—			—			25,123			25,123
Comprehensive income																486,410
Dividends		—		—			—			238			—			238
Issuance of treasury shares related to equity awards		—		(43	)		43			—			—			—
Stock compensation		—		35,055			—			—			—			35,055
Purchase of treasury shares related to equity awards		—		—			(49	)		—			—			(49	)
Purchase of treasury shares under share repurchase plan, including any associated excise tax		—		—			(20,089	)		—			—			(20,089	)
Cancellation of treasury shares				—			—			—			—			—
Share capital currency change		—		—			—			—			—			—
Balance at September 28, 2024	$	19,490	$	2,218,170		$	(243,994	)	$	5,563,576		$	(50,695	)	$	7,506,547

See accompanying notes.

5

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the 39-Weeks Ended September 28, 2024 and September 30, 2023

(In thousands)

	Common Shares			Additional Paid-In Capital			Treasury Shares			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		—			—			—			747,509			—			747,509
Translation adjustment		—			—			—			—			(56,793	)		(56,793	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $2,327		—			—			—			—			10,499			10,499
Comprehensive income																	701,215
Dividends		—			—			—			(558,882	)		—			(558,882	)
Issuance of treasury shares related to equity awards		—			(6,482	)		28,428			—			—			21,946
Stock compensation		—			66,214			—			—			—			66,214
Purchase of treasury shares related to equity awards		—			—			(9,397	)		—			—			(9,397	)
Purchase of treasury shares under share repurchase plan, including any associated excise tax		—			—			(76,156	)		—			—			(76,156	)
Cancellation of treasury shares		(238	)		—			200,827			(200,589	)		—			—
Share capital currency change		1,847			(1,847	)		—			—			—			—
Balance at September 30, 2023	$	19,588		$	2,100,357		$	(331,393	)	$	4,721,555		$	(160,827	)	$	6,349,280
	Common Shares			Additional Paid-In Capital			Treasury Shares			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 30, 2023	$	19,588		$	2,125,467		$	(330,909	)	$	5,263,528		$	(65,614	)	$	7,012,060
Net income		—			—			—			975,703			—			975,703
Translation adjustment		—			—			—			—			(17,199	)		(17,199	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $10,810		—			—			—			—			32,118			32,118
Comprehensive income																	990,622
Dividends		—			—			—			(576,580	)		—			(576,580	)
Issuance of treasury shares related to equity awards		—			(8,336	)		32,866			—			—			24,530
Stock compensation		—			101,039			—			—			—			101,039
Purchase of treasury shares related to equity awards		—			—			(16,313	)		—			—			(16,313	)
Purchase of treasury shares under share repurchase plan, including any associated excise tax		—			—			(28,811	)		—			—			(28,811	)
Cancellation of treasury shares		(98	)		—			99,173			(99,075	)		—			—
Share capital currency change		—			—			—			—			—			—
Balance at September 28, 2024	$	19,490		$	2,218,170		$	(243,994	)	$	5,563,576		$	(50,695	)	$	7,506,547

See accompanying notes.

6

Garmin Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 28, 2024

(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 its wholly-owned subsidiaries (collectively, we, our, us, 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 30, 2023 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 30, 2023.

The Company's operating results are subject to fluctuations associated with seasonal demand for consumer products, the timing of new product introductions, and original equipment manufacturer (OEM) customer production schedules. Therefore, operating results for the 13-week and 39-week periods ended September 28, 2024 are not necessarily indicative of the results that may be expected for the year ending December 28, 2024.

The Company’s fiscal year is based on a 52- or 53-week period ending on the last Saturday of the calendar year. Therefore, the financial results of certain 53-week fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated 13-week quarters. The quarters ended September 28, 2024 and September 30, 2023 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.

In the first quarter of fiscal 2024, the Company changed the presentation of operating expense to include advertising expense within selling, general and administrative expenses on the Company's condensed consolidated statements of income, which management believes to be a more meaningful presentation. As a result, the Company’s condensed consolidated statements of income have been recast for the 13-week and 39-week periods ended September 30, 2023 to conform with the current period presentation. This change had no effect on the Company’s consolidated operating or net income.

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 30, 2023. There were no material changes to the Company’s significant accounting policies during the 39-week period ended September 28, 2024.

7

Recently Adopted Accounting Standards

There are no recently adopted accounting standards that have a material impact on the Company’s consolidated financial statements, accounting policies, processes, or systems.

Recently Issued Accounting Pronouncements Not Yet Adopted

Income Taxes

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the income tax rate reconciliation and income taxes paid. ASU 2023-09 will require the Company to disclose specified additional information in its income tax rate reconciliation, provide additional information for certain reconciling items, and disaggregate its disclosure of income taxes paid by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments may be applied using either a prospective or retrospective approach.

Segment Reporting

In November 2023, the FASB issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to improve reportable segment disclosure requirements, primarily through enhanced disclosures. ASU 2023-07 will require the Company to disclose additional information about certain significant segment expenses, as well as how the Company’s chief operating decision maker (CODM) uses segment profit or loss information in assessing segment performance and deciding how to allocate resources. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company will adopt ASU 2023-07 using a retrospective transition method.

2. Revenue

In order to further depict how the nature, amount, timing and uncertainty of the Company's 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 contractual service period or estimated life of the product. Revenue disaggregated by the timing of transfer of the goods or services is presented in the table below:

	13-Weeks Ended				39-Weeks Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Point in time	$	1,496,940	$	1,200,676	$	4,231,561	$	3,532,960
Over time		89,082		76,855		242,781		212,791
Net sales	$	1,586,022	$	1,277,531	$	4,474,342	$	3,745,751

Transaction price and costs associated with the Company’s unsatisfied performance obligations are reflected as deferred revenue and deferred costs, respectively, on the Company’s condensed consolidated balance sheets. Such amounts are recognized ratably over the applicable service period or estimated useful life. Changes in deferred revenue and costs during the 39-week period ended September 28, 2024 are presented below:

8

	39-Weeks Ended September 28, 2024
	Deferred  Revenue (1)			Deferred Costs (2)
Balance, beginning of period	$	137,337		$	27,373
Deferrals in period		248,720			47,371
Recognition of deferrals in period		(242,781	)		(43,365	)
Balance, end of period	$	143,276		$	31,379

(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 $242,781 of deferred revenue recognized in the 39-week period ended September 28, 2024, approximately $84,371 was deferred as of the beginning of the period. Of the $143,276 of deferred revenue as of September 28, 2024, the Company expects to recognize approximately 90% ratably over a total period of three years or less.

3. Earnings Per Share

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

	13-Weeks Ended				39-Weeks Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Numerator:
Numerator for basic and diluted net income per share – net income	$	399,111	$	257,243	$	975,703	$	747,509
Denominator:
Denominator for basic net income per share – weighted-average common shares		192,201		191,435		192,055		191,409
Effect of dilutive equity awards		970		433		885		363
Denominator for diluted net income per share – adjusted weighted-average common shares		193,171		191,868		192,940		191,772
Basic net income per share	$	2.08	$	1.34	$	5.08	$	3.91
Diluted net income per share	$	2.07	$	1.34	$	5.06	$	3.90
Shares excluded from diluted net income per share calculation:
Anti-dilutive equity awards		—		—		—		215

4. Marketable Securities

Accounting Standards Codification 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

9

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 or liabilities in active markets, quoted prices for identical or similar assets or liabilities 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 September 28, 2024
	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	Level 2	$	4,869	$	20	$	—		$	4,889
Agency securities	Level 2		25,955		145		(333	)		25,767
Mortgage-backed securities	Level 2		34,910		—		(3,605	)		31,305
Corporate debt securities	Level 2		1,203,805		9,573		(21,262	)		1,192,116
Municipal securities	Level 2		274,323		508		(10,435	)		264,396
Other	Level 2		2,874		—		(114	)		2,760
Total		$	1,546,736	$	10,246	$	(35,749	)	$	1,521,233

	Available-For-Sale Securities as of December 30, 2023
	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	Level 2	$	2,971	$	1	$	—		$	2,972
Agency securities	Level 2		23,692		32		(585	)		23,139
Mortgage-backed securities	Level 2		38,743		—		(4,731	)		34,012
Corporate debt securities	Level 2		1,104,834		1,680		(46,073	)		1,060,441
Municipal securities	Level 2		294,240		98		(18,430	)		275,908
Other	Level 2		3,760		—		(423	)		3,337
Total		$	1,468,240	$	1,811	$	(70,242	)	$	1,399,809

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 $13,386 as of September 28, 2024, is excluded from both the fair value and amortized cost basis of available-for-sale securities and is included within prepaid expenses and other current assets on the Company’s condensed consolidated balance sheets. The Company writes off impaired accrued interest on a timely basis, generally within 30 days of the due date, by reversing interest income. No accrued interest was written off during the 39-week period ended September 28, 2024.

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 72% of securities in the Company’s portfolio were at an unrealized loss position as of September 28, 2024.

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The following tables display additional information regarding gross unrealized losses and fair value by major security type for available-for-sale securities in an unrealized loss position as of September 28, 2024 and December 30, 2023.

	As of September 28, 2024
	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	$	—		$	1,000	$	(333	)	$	6,667	$	(333	)	$	7,667
Mortgage-backed securities		—			—		(3,605	)		31,305		(3,605	)		31,305
Corporate debt securities		(127	)		36,935		(21,135	)		688,156		(21,262	)		725,091
Municipal securities		—			—		(10,435	)		235,171		(10,435	)		235,171
Other		—			—		(114	)		2,760		(114	)		2,760
Total	$	(127	)	$	37,935	$	(35,622	)	$	964,059	$	(35,749	)	$	1,001,994

	As of December 30, 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	$	(31	)	$	10,923	$	(554	)	$	6,446	$	(585	)	$	17,369
Mortgage-backed securities		—			—		(4,731	)		34,012		(4,731	)		34,012
Corporate debt securities		(702	)		64,637		(45,371	)		889,785		(46,073	)		954,422
Municipal securities		(32	)		2,654		(18,398	)		261,651		(18,430	)		264,305
Other		—			—		(423	)		3,337		(423	)		3,337
Total	$	(765	)	$	78,214	$	(69,477	)	$	1,195,231	$	(70,242	)	$	1,273,445

As of September 28, 2024 and December 30, 2023, 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 the Company does not consider the declines in fair value to have resulted from credit losses. The Company has 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 September 28, 2024, by maturity, are shown below.

	Amortized Cost		Fair Value
Due in one year or less	$	421,840	$	414,701
Due after one year through five years		1,108,518		1,092,026
Due after five years through ten years		7,588		7,001
Due after ten years		8,790		7,505
Total	$	1,546,736	$	1,521,233

5. Income Taxes

The Company recorded income tax expense of $87,139 in the 13-week period ended September 28, 2024, compared to income tax expense of $22,328 in the 13-week period ended September 30, 2023. The effective tax rate was 17.9% in the third quarter of 2024, compared to 8.0% in the third quarter of 2023. The increase in effective tax rate between comparative periods was primarily due to the increase in the combined federal and cantonal Switzerland statutory tax rate in response to the implementation of global minimum tax requirements.

The Company recorded income tax expense of $203,560 in the 39-week period ended September 28, 2024, compared to income tax expense of $69,810 in the 39-week period ended September 30, 2023. The effective tax rate was 17.3% in the first three quarters of 2024, compared to 8.5% in the first three quarters of 2023. The increase in effective tax rate between comparative periods was primarily due to the increase in the combined federal and cantonal Switzerland statutory tax rate in response to the implementation of global minimum tax requirements.

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6. Inventories

The components of inventories consist of the following:

	September 28, 2024		December 30, 2023
Raw materials	$	565,253	$	493,493
Work-in-process		227,701		160,919
Finished goods		712,582		691,543
Inventories	$	1,505,536	$	1,345,955

7. Warranty Reserves

The Company accrues for estimated future warranty costs at the time products are sold. The Company’s standard warranty obligation to retail partners generally provides for a right of return of any product for a full refund in the event that such product is not merchantable, is damaged, or is defective. The Company’s 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, with most claims resolved within a year of the sale. The following reconciliation presents details of the changes in the Company's accrued warranty costs:

	13-Weeks Ended						39-Weeks Ended
	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Balance - beginning of period	$	58,253		$	52,352		$	55,738		$	50,952
Accrual for products sold (1)		19,039			17,398			64,334			58,124
Expenditures		(19,309	)		(16,217	)		(62,089	)		(55,543	)
Balance - end of period	$	57,983		$	53,533		$	57,983		$	53,533

(1) Changes in cost estimates related to pre-existing warranties were not material and are 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 its business. The aggregate amount of purchase orders and other commitments open as of September 28, 2024 that may represent noncancelable unconditional purchase obligations having a remaining term in excess of one year was approximately $339,000.

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 $713 and $704 on September 28, 2024 and December 30, 2023, 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 September 28, 2024. 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.

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The Company settled or resolved certain matters during the 13-week and 39-week periods ended September 28, 2024 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 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.

The Company's shareholders approved the following dividends:

Approval Date	Dividend Payment Date	Record Date	Dividend Per Share
Fiscal 2024
June 7, 2024	June 28, 2024	June 17, 2024	$	0.75
June 7, 2024	September 27, 2024	September 13, 2024	$	0.75
June 7, 2024	December 27, 2024	December 13, 2024	$	0.75
June 7, 2024	March 28, 2025	March 14, 2025	$	0.75
Total			$	3.00
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

Share Repurchase Programs

On April 22, 2022, the Board of Directors approved a share repurchase program (the “2022 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. As of December 30, 2023, the Company had repurchased 3,176 shares for $300,000, leaving $0 available to repurchase additional shares under the 2022 Program when the share repurchase authorization expired on December 29, 2023.

On February 16, 2024, the Board of Directors approved a new share repurchase program (the “2024 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 2024 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 26, 2026. As of September 28, 2024, the Company had repurchased 176 shares for $29,802, leaving $270,198 available to repurchase additional shares under the 2024 Program.

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Treasury Shares

In March 2024, the Board of Directors authorized the cancellation of 979 shares previously purchased under our share repurchase program. The capital reduction by cancellation of these shares became effective in March 2024. Total stockholders’ equity reported for the Company was not affected.

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 39-week periods ended September 28, 2024:

	13-Weeks Ended September 28, 2024
	Foreign currency translation adjustment			Net gains (losses) on available-for-sale securities			Total
Balance - beginning of period	$	(90,883	)	$	(47,111	)	$	(137,994	)
Other comprehensive income before reclassification, net of income tax expense of $8,613		62,176			25,123			87,299
Amounts reclassified from accumulated other comprehensive income to other income (expense), net of income tax of $0 included in income tax provision		—			—			—
Net current-period other comprehensive income (loss)		62,176			25,123			87,299
Balance - end of period	$	(28,707	)	$	(21,988	)	$	(50,695	)

	39-Weeks Ended September 28, 2024
	Foreign currency translation adjustment			Net gains (losses) on available-for-sale securities			Total
Balance - beginning of period	$	(11,508	)	$	(54,106	)	$	(65,614	)
Other comprehensive income (loss) before reclassification, net of income tax expense of $10,805		(17,199	)		32,094			14,895
Amounts reclassified from accumulated other comprehensive income (loss) to other income (expense), net of income tax benefit of $5 included in income tax provision		—			24			24
Net current-period other comprehensive income (loss)		(17,199	)		32,118		$	14,919
Balance - end of period	$	(28,707	)	$	(21,988	)	$	(50,695	)

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 the Company's 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.

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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 September 28, 2024
Net sales	$	463,887	$	526,551	$	204,631	$	222,244	$	168,709		$	1,586,022
Gross profit		283,325		358,693		154,138		122,433		33,010			951,599
Operating income (loss)		147,768		208,866		44,278		37,839		(1,276	)		437,475
13-Weeks Ended September 30, 2023
Net sales	$	352,976	$	433,997	$	198,160	$	182,248	$	110,150		$	1,277,531
Gross profit		190,685		270,774		148,364		95,186		23,560			728,569
Operating income (loss)		74,614		136,401		49,269		23,850		(13,765	)		270,369
39-Weeks Ended September 28, 2024
Net sales	$	1,235,182	$	1,332,617	$	639,739	$	821,933	$	444,871		$	4,474,342
Gross profit		723,375		885,646		478,131		449,472		80,006			2,616,630
Operating income (loss)		323,511		451,408		146,899		185,422		(29,327	)		1,077,913
39-Weeks Ended September 30, 2023
Net sales	$	932,561	$	1,210,773	$	629,195	$	677,026	$	296,196		$	3,745,751
Gross profit		484,759		755,800		463,774		365,162		71,311			2,140,806
Operating income (loss)		139,651		351,399		169,730		142,135		(51,209	)		751,706

Net sales to external customers by geographic region for the 13-week and 39-week periods ended September 28, 2024 and September 30, 2023 are presented below. Note that APAC includes Asia Pacific and Australian Continent and EMEA includes Europe, the Middle East and Africa.

	13-Weeks Ended				39-Weeks Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Americas	$	724,572	$	628,157	$	2,181,266	$	1,881,710
EMEA		612,658		439,123		1,618,058		1,252,526
APAC		248,792		210,251		675,018		611,515
Net sales to external customers	$	1,586,022	$	1,277,531	$	4,474,342	$	3,745,751

12. Subsequent Events

On September 30, 2024, the Company acquired Lumishore, a privately-held company that designs and manufactures high-performance above and underwater LED lighting systems for boats. This acquisition was not material.

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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 on Form 10-Q, contain statements concerning potential future events. Such forward-looking statements are based upon assumptions by management, as of the date of this Quarterly Report on Form 10-Q, including assumptions about risks and uncertainties faced by the Company. Readers can identify these forward-looking statements by their use of such words as "future", "expects", "anticipates", "believes", “estimates”, “would”, “could”, “can”, “may,” or other similar words or other comparable terms. 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 30, 2023. Readers are strongly encouraged to consider those factors when evaluating any forward-looking statement concerning the Company. These forward-looking statements are made as of the date hereof, and the Company disclaims any obligation to update any forward-looking statements in this Quarterly Report on Form 10-Q to reflect future events or developments, except as required by law.

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 Quarterly Report on 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 30, 2023. Unless the context otherwise requires, references in this document to "we", "us", "our", the "Company" 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, and 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.

Results of Operations

As indicated in Note 1 to the Condensed Consolidated Financial Statements, in the first quarter of fiscal 2024, the Company changed the presentation of operating expense to include advertising expense within selling, general and administrative expenses on the Company's condensed consolidated statements of income, which management believes to be a more meaningful presentation.

This change in presentation had no effect on the Company's consolidated operating or net income. The amounts presented below for selling, general and administrative expenses for the 13-week and 39-week periods ended September 30, 2023 have been recast to conform with the current period presentation.

Comparison of 13-Weeks Ended September 28, 2024 and September 30, 2023

Net Sales

Net Sales	13-Weeks Ended September 28, 2024			Year-over-Year Change			13-Weeks Ended September 30, 2023
Fitness	$	463,887			31	%	$	352,976
Percentage of Total Net Sales		29	%					27	%
Outdoor		526,551			21	%		433,997
Percentage of Total Net Sales		33	%					34	%
Aviation		204,631			3	%		198,160
Percentage of Total Net Sales		13	%					16	%
Marine		222,244			22	%		182,248
Percentage of Total Net Sales		14	%					14	%
Auto OEM		168,709			53	%		110,150
Percentage of Total Net Sales		11	%					9	%
Total	$	1,586,022			24	%	$	1,277,531

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Net sales increased 24% for the 13-week period ended September 28, 2024 when compared to the year-ago quarter. Total unit sales in the third quarter of 2024 increased to 4,620 when compared to total unit sales of 3,997 in the third quarter of 2023, 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 33% in the third quarter of 2024 compared to 34% in the third quarter of 2023.

The increase in fitness revenue was driven by sales growth across all categories, led by strong demand for wearables. Outdoor revenue increased primarily due to sales growth in adventure watches. The increase in aviation revenue was driven by sales growth in aftermarket product categories. The increase in marine revenue was primarily driven by contributions from the Company's acquisition of JL Audio. Auto OEM revenue increased primarily due to growth in domain controllers.

Gross Profit

Gross Profit	13-Weeks Ended September 28, 2024			Year-over-Year Change			13-Weeks Ended September 30, 2023
Fitness	$	283,325			49	%	$	190,685
Percentage of Segment Net Sales		61	%					54	%
Outdoor		358,693			32	%		270,774
Percentage of Segment Net Sales		68	%					62	%
Aviation		154,138			4	%		148,364
Percentage of Segment Net Sales		75	%					75	%
Marine		122,433			29	%		95,186
Percentage of Segment Net Sales		55	%					52	%
Auto OEM		33,010			40	%		23,560
Percentage of Segment Net Sales		20	%					21	%
Total	$	951,599			31	%	$	728,569
Percentage of Total Net Sales		60	%					57	%

Gross profit dollars in the third quarter of 2024 increased 31%, primarily due to the increase in net sales when compared to the year-ago quarter, as described above. Consolidated gross margin increased 300 basis points when compared to the year-ago quarter primarily due to lower costs of goods and favorable product mix within certain segments, partially offset by unfavorable segment mix.

The fitness, outdoor, and marine gross margin increases of 710 basis points, 570 basis points, and 290 basis points, respectively, were primarily attributable to lower costs of goods and favorable product mix. The aviation gross margin was relatively flat when compared to the year-ago quarter. The auto OEM gross margin decrease of 180 basis points was primarily attributable to unfavorable product mix.

Operating Expense

Operating Expense	13-Weeks Ended September 28, 2024			Year-over-Year Change			13-Weeks Ended September 30, 2023
Research and development expense		249,162			12	%		221,572
Percentage of Total Net Sales		16	%					17	%
Selling, general and administrative expenses		264,962			12	%		236,628
Percentage of Total Net Sales		17	%					19	%
Total	$	514,124			12	%	$	458,200
Percentage of Total Net Sales		32	%					36	%

Total operating expense in the third quarter of 2024 increased 12% in absolute dollars and decreased 350 basis points as a percent of revenue when compared to the year-ago quarter.

Research and development expense increased 12% in absolute dollars and decreased 160 basis points 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.

Selling, general and administrative expenses increased 12% in absolute dollars and decreased 180 basis points when compared to the year-ago quarter. The absolute dollar expense increase was primarily attributable to increased personnel-related expenses.

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Operating Income

Operating Income (Loss)	13-Weeks Ended September 28, 2024			Year-over-Year Change			13-Weeks Ended September 30, 2023
Fitness	$	147,768			98	%	$	74,614
Percentage of Segment Net Sales		32	%					21	%
Outdoor		208,866			53	%		136,401
Percentage of Segment Net Sales		40	%					31	%
Aviation		44,278			(10	%)		49,269
Percentage of Segment Net Sales		22	%					25	%
Marine		37,839			59	%		23,850
Percentage of Segment Net Sales		17	%					13	%
Auto OEM		(1,276	)		(91	%)		(13,765	)
Percentage of Segment Net Sales		(1	%)					(12	%)
Total	$	437,475			62	%	$	270,369
Percentage of Total Net Sales		28	%					21	%

Total operating income in the third quarter of 2024 increased 62% in absolute dollars and increased 640 basis points as a percent of revenue when compared to the year-ago quarter. The increase in operating income as a percent of revenue was driven by increased sales, increased gross margin as a percent of revenue, and lower operating expenses as a percent of revenue, as described above. The improved performance in fitness, outdoor, marine, and auto OEM was partially offset by a decrease in aviation.

Other Income (Expense)

Other Income (Expense)	13-Weeks Ended September 28, 2024		13-Weeks Ended September 30, 2023
Interest income	$	28,830	$	19,803
Foreign currency gains (losses)		18,131		(11,539	)
Other income		1,814		938
Total	$	48,775	$	9,202

The average interest rate return on cash and investments during the third quarter of 2024 was 3.3%, compared to 2.8% during the same quarter of 2023.

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 $18.1 million currency gain recognized in the third quarter of 2024 was primarily due to the U.S. Dollar weakening against the British Pound Sterling, Euro, and Polish Zloty, partially offset by the U.S. Dollar weakening against the Taiwan Dollar, within the 13-week period ended September 28, 2024. During this period, the U.S. Dollar weakened 3.7% against the British Pound Sterling, 4.2% against the Euro, and 5.3% against the Polish Zloty, resulting in gains of $3.2 million, $8.9 million, and $9.3 million, respectively, while the U.S. Dollar weakened 2.9% against the Taiwan Dollar, resulting in a loss of $10.4 million. The remaining net currency gain of $7.1 million was related to the impacts of other currencies, each of which was individually immaterial.

The $11.5 million currency loss recognized in the third quarter of 2023 was primarily due to the U.S. Dollar strengthening against the Polish Zloty, Australian Dollar, and British Pound Sterling, partially offset by the U.S. Dollar strengthening against the Taiwan Dollar within the 13-week period ended September 30, 2023. During this period, the U.S. Dollar strengthened 6.8% against the Polish Zloty, 2.9% against the Australian Dollar, and 4.0% against the British Pound Sterling, resulting in losses of $18.4 million, $2.4 million, and $1.9 million, respectively, partially offset by the U.S. Dollar strengthening 3.4% against the Taiwan Dollar, resulting in a gain of $15.2 million. The remaining net currency loss of $4.0 million was related to the impacts of other currencies, each of which was individually immaterial.

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Income Tax Provision

The Company recorded income tax expense of $87.1 million in the 13-week period ended September 28, 2024, compared to income tax expense of $22.3 million in the 13-week period ended September 30, 2023. The effective tax rate was 17.9% in the third quarter of 2024, compared to 8.0% in the third quarter of 2023. The increase in effective tax rate between comparative periods was primarily due to the increase in the combined federal and cantonal Switzerland statutory tax rate in response to the implementation of global minimum tax requirements.

Net Income

As a result of the above, net income for the 13-week period ended September 28, 2024 was $399.1 million compared to $257.2 million for the 13-week period ended September 30, 2023, an increase of $141.9 million.

Comparison of 39-Weeks Ended September 28, 2024 and September 30, 2023

Net Sales

Net Sales	39-Weeks Ended September 28, 2024			Year-over-Year Change			39-Weeks Ended September 30, 2023
Fitness	$	1,235,182			32	%	$	932,561
Percentage of Total Net Sales		28	%					25	%
Outdoor		1,332,617			10	%		1,210,773
Percentage of Total Net Sales		30	%					32	%
Aviation		639,739			2	%		629,195
Percentage of Total Net Sales		14	%					17	%
Marine		821,933			21	%		677,026
Percentage of Total Net Sales		18	%					18	%
Auto OEM		444,871			50	%		296,196
Percentage of Total Net Sales		10	%					8	%
Total	$	4,474,342			19	%	$	3,745,751

Net sales increased 19% for the 39-week period ended September 28, 2024 when compared to the year-ago period. Total unit sales in the first three quarters of 2024 increased to 13,165 when compared to total unit sales of 11,369 in the first three quarters of 2023, 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 30% in the first three quarters of 2024 compared to 32% in the first three quarters of 2023.

The increase in fitness revenue was driven by sales growth across all categories, led by strong demand for wearables. Outdoor revenue increased primarily due to sales growth in adventure watches. Aviation revenue increased primarily due to growth in OEM product categories. Marine revenue increased primarily driven by contributions from the Company's acquisition of JL Audio. Auto OEM revenue increased primarily due to growth in domain controllers.

Gross Profit

Gross Profit	39-Weeks Ended September 28, 2024			Year-over-Year Change			39-Weeks Ended September 30, 2023
Fitness	$	723,375			49	%	$	484,759
Percentage of Segment Net Sales		59	%					52	%
Outdoor		885,646			17	%		755,800
Percentage of Segment Net Sales		66	%					62	%
Aviation		478,131			3	%		463,774
Percentage of Segment Net Sales		75	%					74	%
Marine		449,472			23	%		365,162
Percentage of Segment Net Sales		55	%					54	%
Auto OEM		80,006			12	%		71,311
Percentage of Segment Net Sales		18	%					24	%
Total	$	2,616,630			22	%	$	2,140,806
Percentage of Total Net Sales		58	%					57	%

Gross profit dollars in the first three quarters of 2024 increased 22%, primarily due to the increase in net sales when compared to the year-ago period, as described above. Consolidated gross margin increased 130 basis points when compared to the year-ago period primarily due to favorable product mix within certain segments and lower costs of goods, partially offset by unfavorable segment mix.

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The fitness and outdoor gross margin increases of 660 and 400 basis points, respectively, were primarily attributable to favorable product mix and lower costs of goods. The aviation gross margin increase of 100 basis points was primarily attributable to lower warranty costs. The marine gross margin was relatively flat when compared to the year-ago period. The auto OEM gross margin decrease of 610 basis points was primarily attributable to unfavorable product mix.

Operating Expense

Operating Expense	39-Weeks Ended September 28, 2024			Year-over-Year Change			39-Weeks Ended September 30, 2023
Research and development expense	$	734,848			10	%	$	667,451
Percentage of Total Net Sales		16	%					18	%
Selling, General and administrative expenses		803,869			11	%		721,649
Percentage of Total Net Sales		18	%					19	%
Total	$	1,538,717			11	%	$	1,389,100
Percentage of Total Net Sales		34	%					37	%

Total operating expense in the first three quarters of 2024 increased 11% in absolute dollars and decreased 270 basis points as a percent of revenue when compared to the year-ago period.

Research and development expense increased 10% in absolute dollars and decreased 140 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.

Selling, general and administrative expense increased 11% in absolute dollars and decreased 130 basis points as a percent of revenue compared to the year-ago period. The absolute dollar expense increase was primarily attributable to increased personnel-related expenses, including the impact of the Company's acquisition of JL Audio.

Operating Income

Operating Income (Loss)	39-Weeks Ended September 28, 2024			Year-over-Year Change			39-Weeks Ended September 30, 2023
Fitness	$	323,511			132	%	$	139,651
Percentage of Segment Net Sales		26	%					15	%
Outdoor		451,408			28	%		351,399
Percentage of Segment Net Sales		34	%					29	%
Aviation		146,899			(13	%)		169,730
Percentage of Segment Net Sales		23	%					27	%
Marine		185,422			30	%		142,135
Percentage of Segment Net Sales		23	%					21	%
Auto OEM		(29,327	)		(43	%)		(51,209	)
Percentage of Segment Net Sales		(7	%)					(17	%)
Total	$	1,077,913			43	%	$	751,706
Percentage of Total Net Sales		24	%					20	%

Total operating income in the first three quarters of 2024 increased 43% in absolute dollars and 400 basis points as a percent of revenue when compared to the year-ago period. The increase in operating income as a percent of revenue was due to increased sales, increased gross margin as a percent of revenue, and lower operating expenses as a percent of revenue, as described above. The improved performance in fitness, outdoor, marine, and auto OEM was partially offset by a decrease in aviation.

Other Income (Expense)

Other Income (Expense)	39-Weeks Ended September 28, 2024		39-Weeks Ended September 30, 2023
Interest income	$	83,143	$	54,461
Foreign currency gains		15,584		6,946
Other income		2,623		4,206
Total	$	101,350	$	65,613

The average interest rate returns on cash and investments during the 39-week periods ended September 28, 2024 and September 30, 2023 were 3.3% and 2.6%, respectively.

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

The $15.6 million currency gain recognized in the 39-week period ended September 28, 2024 was primarily due to the U.S. Dollar strengthening against the Taiwan Dollar within the 39-week period ended September 28, 2024. During this period, the U.S. Dollar strengthened 2.8% against the Taiwan Dollar, resulting in a gain of $19.6 million. The remaining net currency loss of $4.0 million was related to the impacts of other drivers, each of which was individually immaterial.

The $6.9 million currency gain recognized in the 39-week period ended September 30, 2023 was primarily due to the U.S. Dollar strengthening against the Taiwan Dollar, partially offset by the U.S. Dollar strengthening against the Australian Dollar, Chinese Yuan and Japanese Yen and U.S. Dollar volatility with the Polish Zloty within the 39-week period ended September 30, 2023. During this period, the U.S. Dollar strengthened 4.9% against the Taiwan Dollar, resulting in a gain of $21.1 million, partially offset by the U.S. Dollar strengthening 5.2% against the Australian Dollar, 4.6% against the Chinese Yuan, and 12.2% against the Japanese Yen, resulting in losses of $2.9 million, $2.9 million, and $2.8 million, respectively, while volatility with the Polish Zloty resulted in a net loss of $4.5 million as the loss in the third quarter more than offset gains in previous quarters. The remaining net currency loss of $1.1 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 $203.6 million in the first three quarters of 2024, compared to income tax expense of $69.8 million in the first three quarters of 2023. The effective tax rate was 17.3% in the first three quarters of 2024, compared to 8.5% in the first three quarters of 2023. The increase in effective tax rate between comparative periods was primarily due to the increase in the combined federal and cantonal Switzerland statutory tax rate in response to the implementation of global minimum tax requirements.

Net Income

As a result of the above, net income for the 39-week period ended September 28, 2024 was $975.7 million compared to $747.5 million for the 39-week period ended September 30, 2023, an increase of $228.2 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 September 28, 2024, we had approximately $3.5 billion of cash, cash equivalents and marketable securities. Management invests idle or surplus cash in accordance with the Company's 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 rate returns on cash and investments during the first three quarters of 2024 and 2023 were 3.3% and 2.6%, respectively. The fair value of our 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. See Note 4 in the Notes to the Condensed Consolidated Financial Statements for additional information regarding marketable securities.

Cash Flows

Cash provided by operating activities totaled $948.6 million for the first three quarters of 2024, compared to $910.3 million for the first three quarters of 2023. The increase was primarily due to an increase in cash received from customers primarily driven by higher net sales as well as less cash paid for income taxes, partially offset by increases in cash paid for cost of goods sold and operating expenses in the first three quarters of 2024 compared to the first three quarters of 2023.

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Cash used in investing activities totaled $190.8 million for the first three quarters of 2024, compared to $267.7 million for the first three quarters of 2023. The decrease was primarily due to a decrease in cash used for acquisitions and a decrease in purchases of property and equipment, partially offset by net purchases of marketable securities in the first three quarters of 2024, compared to net redemptions of marketable securities in the first three quarters of 2023.

Cash used in financing activities totaled $449.4 million for the first three quarters of 2024, compared to $486.2 million for the first three quarters of 2023. This decrease was primarily due to lower purchases of treasury shares under share repurchase plans and partially offset by higher cash dividend payments in the first three quarters of 2024 compared to the first three quarters of 2023.

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 September 28, 2024, the Company had fixed lease payment obligations of $161.8 million, with $33.4 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 September 28, 2024, the Company had inventory purchase obligations of $847.2 million, with $673.2 million payable within 12 months.

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 September 28, 2024, the Company had other purchase obligations of $316.6 million, with $122.1 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 30, 2023. There were no significant changes to the Company’s critical accounting policies and estimates in the 13-week and 39-week periods ended September 28, 2024.

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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 30, 2023. There have been no material changes during the 13-week and 39-week periods ended September 28, 2024 in the risks described in our Annual Report on Form 10-K related to market sensitivity, inflation, foreign currency exchange rate risk and interest rate risk.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. The Company maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. As of September 28, 2024, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of September 28, 2024 that our disclosure controls and procedures were effective such that the information relating to the Company, required to be disclosed in our Securities and Exchange Commission (SEC) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. There has been no change in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended September 28, 2024 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 business, 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 30, 2023.

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 30, 2023. There have been no material changes during the 39-week period ended September 28, 2024 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 September 28, 2024, 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
June 30, 2024 - July 27, 2024		38	$	168.18		38	$	283,896
July 28, 2024 - August 24, 2024		18	$	176.22		18	$	280,724
August 25, 2024 - September 28, 2024		60	$	176.32		60	$	270,198
Total		116				116

(1) The Board of Directors approved a share repurchase program on February 16, 2024 (the "2024 Program"), which was announced on February 21, 2024. The 2024 Program authorizes 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 2024 Program does not require the purchase of any minimum number of shares and may be suspended or discontinued at any time. The 2024 Program expires on December 26, 2026. Refer to Note 9 in the Notes to the Condensed Consolidated Financial Statements 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 September 28, 2024, no directors or officers (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, except as follows:

•

On August 12, 2024, Douglas Boessen, Chief Financial Officer and Treasurer, adopted a new written trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act for the potential sale of up to 5,418 shares of our common shares, subject to certain conditions. The first trade date will not occur until December 16, 2024 at the earliest, and the plan's maximum duration is until May 1, 2025.

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Item 6. Exhibits

Exhibit 3.1	Articles of Association of Garmin Ltd., as amended and restated on June 7, 2024 (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed on June 11, 2024).
Exhibit 3.2	Organizational Regulations of Garmin Ltd., as amended on October 25, 2019 (incorporated by reference to Exhibit 3.2 of the Registrant’s Amendment No.1 to Current Report on Form 8-K/A filed on November 21, 2019).
Exhibit 10.1*‡	Garmin Ltd. 2005 Equity Incentive Plan, as amended and restated on October 25, 2024.
Exhibit 10.2*‡	Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive Plan, for Swiss grantees.
Exhibit 10.3*‡	Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive Plan, for Canadian grantees.
Exhibit 10.4*‡	Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive Plan, for non-Swiss and non-Canadian grantees.
Exhibit 10.5*‡	Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive Plan, for awards of performance-based and time-based vesting restricted stock unit awards to non-Swiss and non-Canadian grantees who are executive officers.
Exhibit 10.6*‡	Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive Plan, for awards of performance-based and time-based vesting restricted stock unit awards to Swiss grantees who are not executive officers.
Exhibit 10.7*‡	Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive Plan, for awards of performance-based and time-based vesting restricted stock unit awards to Canadian grantees who are not executive officers.
Exhibit 10.8*‡	Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive Plan, for awards of performance-based and time-based vesting restricted stock unit awards to non-Swiss and non-Canadian grantees who are not executive officers.
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‡	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH‡	Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
Exhibit 104‡	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Management contract or compensatory plan or arrangement pursuant to 601(b)(10)(iii)(A) of Regulation S-K.

‡ Filed herewith.

† Furnished herewith.

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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: October 30, 2024

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