Garmin (GRMN) 10-K risk factor changes: FY2017 vs FY2016

Maturation or contraction of the market for wearable devices [added: or categories of devices] could adversely affect our revenue and profits.

If the [added: overall] wearable device market declines, or categories of devices within the wearable device market [removed: decline, such as fitness trackers or smartwatches,] [added: decline significantly,] our business, financial condition or operating results could be materially adversely affected.

The acceptance of this technology by consumers has reduced sales in [removed: this] [added: the auto] segment and has reduced profits in some periods.

The auto segment, which represents approximately [removed: 29%] [added: 24%] of our revenues, is expected to continue to decline in [removed: 2017.][added: 2018.]

This has resulted in, and is expected to continue to result in, [removed: periods of] lower revenues and profits for this segment.

Our tax position could be adversely impacted by changes [removed: in Swiss, United States or foreign] [added: to] tax laws, tax treaties, or tax regulations or the interpretation or enforcement thereof by any tax [removed: authority.][added: authority in which we file income tax returns.]

A significant portion of our global and U.S. sales are comprised of goods assembled and manufactured in our facilities in Taiwan and the [removed: PRC.][added: People’s Republic of China.]

Due to the unprecedented nature of the expected withdrawal, significant uncertainty exists surrounding the [removed: timing and] terms of the expected exit.

We have operations in the UK and several EU member states whose currencies, namely British Pound Sterling (GBP) and Euro, economies, taxation, and trade regulation, among other factors, could be adversely impacted by the negotiations and outcomes of the UK’s leaving the EU, which is likely to be a [removed: lengthy and] complicated process.

| | [removed: ·] [added: •] | If demand increases beyond what we forecast, we would have to rapidly increase production. We would depend on suppliers to provide additional volumes of components and those suppliers might not be able to increase production rapidly enough to meet unexpected demand. |

| | [removed: ·] [added: •] | Rapid increases in production levels to meet unanticipated demand could result in higher costs for manufacturing and supply of components and other expenses. These higher costs could lower our profit margins. Further, if production is increased rapidly, manufacturing quality could decline, which may also lower our margins and reduce customer satisfaction. |

| | [removed: ·] [added: •] | If forecasted demand does not develop, we could have excess inventories of finished products and components, which would use cash and could lead to write-offs of some or all of the excess inventories. Lower than forecasted demand could also result in excess manufacturing capacity or reduced manufacturing efficiencies at our facilities, which could result in lower margins. |

[removed: We depend on our suppliers, some of which are the sole source for specific components, and our] [added: Our] production [added: and business] would be seriously harmed if these suppliers are not able to meet our demand and alternative sources are not available, or if the costs of components rise.

In the [removed: past] [added: past,] we have experienced shortages of certain components.

If suppliers are unable to meet our demand for components on a timely basis and if we are unable to obtain an alternative [removed: source] [added: source,] or if the price of the alternative source is prohibitive, [removed: or if the costs of components rise,] our ability to maintain timely and cost-effective production of our products would be seriously harmed.

Gross margins in some of our segments [removed: have declined in recent years] [added: are volatile] and could [removed: further] decline in the future due to competitive price reductions that are not fully offset by material cost reductions.

Changes in our United States federal income tax [removed: classification] [added: classification, or that of our subsidiaries,] could result in adverse tax consequences to our [added: 10% or greater U.S.] shareholders.

Third parties may claim that we [added: or our customers (some of whom] are [added: indemnified by us) are] infringing their intellectual property rights.

Our users’ [removed: fitness-related data and] personal information may include, among other information, names, addresses, phone numbers, email addresses, payment account information, height, weight, age, [added: gender,] heart rates, sleeping patterns, GPS-based location, and activity patterns.

Due to the volume and types of the personal information and data we manage and the nature of our [removed: products,] [added: products and applications,] the security features of our platform and information systems are critical.

Regulatory authorities around the world are considering a number of legislative and regulatory proposals concerning data protection, and a [removed: newly adopted] [added: new] data protection regulation in the E.U. [added: with significant fines and penalties for noncompliance] will go into effect in May 2018.

[removed: Security breaches and other] [added: Failures or] disruptions, including [removed: as a result of] [added: security breaches or] cyber attacks, [added: to our information technology systems] may harm our reputation and adversely affect our business and [removed: results] [added: result] of operations.

[removed: In the ordinary course of our business,] [added: Additionally,] we electronically maintain sensitive data, including intellectual property, our proprietary business information and that of our customers and suppliers, and some personally identifiable information of our customers and employees, in our facilities and on our networks.

[removed: A] [added: Furthermore, a] breach of our security systems and procedures or those of our vendors could result in significant data losses or theft of our [added: intellectual property as well as our] customers' or our employees' intellectual property, proprietary business information or personally identifiable information.

A cybersecurity breach could negatively affect our [added: competitive position and operating results as a result of theft of our intellectual property and could negatively affect our] reputation as a trusted product and service provider by adversely affecting the market's perception of the security or reliability of our products or services.

Actual or anticipated attacks and risks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, to [removed: train employees,] [added: conduct additional employee training,] and to engage third party security experts and consultants.

There are only a limited number of suppliers of mapping data for [removed: each] [added: some of our products and] geographical [removed: region.][added: regions.]

The [removed: two] largest digital map [removed: suppliers are] [added: supplier for our auto products is] HERE (formerly known as [removed: NAVTEQ) and TomTom N.V. HERE] [added: NAVTEQ), which] is [removed: owned] [added: majority-owned] by [removed: Here Acquisition B.V. (a] [added: a] consortium of Daimler AG, BMW [removed: AG] [added: AG,] and Audi [removed: AG).][added: AG.]

Although we do not foresee difficulty in continuing to license data [added: from HERE] at reasonable pricing due to a long term license agreement [removed: between Garmin and HERE extending] [added: with an option to extend] through [removed: 2024,] [added: 2028,] if we are unable to continue licensing such mapping data [added: from HERE] and [added: other primary suppliers and] are unable to obtain an alternative source, or if the nature of our relationships with [removed: HERE] [added: primary suppliers] changes detrimentally, our ability to supply mapping data for use in our products would be seriously harmed.

Historically, our revenues have been weaker in the first quarter of each fiscal year as [added: many of] our devices are highly consumer-oriented, and consumer buying is traditionally lower in this quarter.

Many of our products rely on the Global Positioning [removed: System.][added: System and other Global Satellite Navigation Systems (GNSS).]

Some of our products also use signals from Satellite Based Augmentation Systems (SBAS) that augment GPS, such as the U.S. Wide Area Augmentation System (WAAS), Japanese MTSAT-based Satellite Augmentation System (MSAS), [removed: Global Navigation Satellite System (GLONASS),] and European Geostationary Navigation Overlay Service (EGNOS).

[removed: In the aftermath of its 2009 “endangerment finding” that greenhouse gas emissions pose a threat to human health and welfare, the] [added: The] Environmental Protection Agency has begun to regulate greenhouse gas emissions under the authority granted to it under the Clean Air Act.

The market price of our [removed: common] shares has been, and may continue to be, highly volatile.

During [removed: 2016,] [added: 2017,] the closing price of our [removed: common] shares ranged from a low of [removed: $32.29] [added: $47.35] to a high of [removed: $55.75.][added: $62.92.]

A variety of factors could cause the price of our [removed: common] shares to fluctuate, perhaps substantially, including:

As of January [removed: 18, 2017, current members and former] [added: 17, 2018,] members of our Board of [removed: Directors] [added: Directors,] and our executive officers, [added: and Gary Burrell (our co-founder and former executive officer and member of our Board of Directors),] together with members of their families and entities that may be deemed affiliates of or related to such persons or entities, beneficially owned approximately [removed: 41.36%] [added: 39.99%] of our outstanding [removed: common] shares.

Our ability to repurchase and hold our own shares [removed: is] [added: has been] a [removed: significant] component of our capital management and shareholder return [removed: practices that we believe is important to our shareholders,] [added: practices,] and any restriction on our ability to repurchase our shares could make our stock less attractive to investors.

In 2017, the fitness tracker market rapidly contracted, resulting in lower sales and profits in our fitness segment.

Switzerland has agreed with the European Union (EU) to execute tax reform by 2019 in exchange for the EU’s waiver of counter-measures.

A failure to accomplish tax reform in the agreed timeframe may result in the EU member states reasserting counter-measure provisions which could result in additional tax for the Company.

The United Kingdom (UK) is scheduled to formally leave the European Union on March 29, 2019.

We depend on third party suppliers and licensors, some of which are sole source, for specific components and map data used in our products.

We are also dependent on third party licensors for digital mapping data used in our products.

In addition, effective copyright, patent and trade secret protection may be unavailable, limited or not applied for in certain countries.

The value of our products relies substantially on our technical innovation in fields in which there are many patent filings.

For example, individuals and groups may purchase intellectual property assets for the purpose of asserting claims of infringement and attempting to extract settlements from us or our customers.

The number of these claims has increased in recent years and may continue to increase in the future.

Our products may contain undetected security vulnerabilities, which could result in damage to our reputation, lost revenue, diverted development resources and increased warranty claims, and litigation

Undiscovered vulnerabilities in our products could expose them to hackers or other unscrupulous third parties who develop and deploy viruses, and other malicious software programs that could attack our products.

Actual or perceived security vulnerabilities in our products could harm our reputation and lead some customers to return products, to reduce or delay future purchases or use competitive products.

We rely on information technology systems for our business operations.

Our information technology systems allow for our daily business operations to operate efficiently and effectively.

These systems assist in our business processes, including, but not limited to, communications, financial management, supply chain management, order processing, shipping and billing and providing services and support to our customers.

A disruption to any of these processes can adversely affect our business and results of operations.

The Tax Cuts and Jobs Act (the “2017 Act”) signed on December 22, 2017 may have changed the consequences to U.S. shareholders that own, or are considered to own, as a result of the attribution rules, ten percent or more of the voting power or value of the stock of a non-U.S. corporation (a 10% U.S. shareholder) under the U.S. Federal income tax law applicable to owners of U.S. controlled foreign corporations (“CFCs”).

Prior to the 2017 Act, the Company did not believe we, or any of our non-U.S. subsidiaries, were considered a CFC, which is a determination made daily based on whether the 10% U.S. shareholders together own, or are considered to own as a result of the attribution rules, more than fifty percent of the voting power or value of a non-U.S. corporation.

The 2017 Act repealed Internal Revenue Code Section 958(b)(4), which, unless clarified in future regulations or other guidance, may result in classification of certain of the Company’s foreign subsidiaries as CFCs with respect to any single 10% U.S. shareholder.

This may be the result without regard to whether 10% U.S. shareholders together own, directly or indirectly, more than fifty percent of the voting power or value of the Company as was the case under prior rules.

The repeal is effective as of the last taxable year of CFCs beginning before January 1, 2018 and for the taxable year of 10% U.S. shareholders in which the CFCs' taxable year ends.

Additional tax consequences to 10% U.S. shareholders of a CFC may result from other provisions of the 2017 Act.

For example, the 2017 Act amended Section 965 to require 10% U.S. shareholders to include in income their pro-rata share of certain earnings and profits (E&P) of CFCs.

This Section 965 inclusion is accompanied by a partial dividends-received deduction.

The 2017 Act also added Section 951A which requires a 10% U.S. shareholder of a CFC to include in income its pro-rata share of the global intangible low-taxed income (GILTI) of the CFC.

Finally, the 2017 Act eliminated the requirement in Section 951(a) necessitating that a foreign corporation be considered a CFC for an uninterrupted period of at least 30 days in order for a 10% U.S. shareholder to have a current income inclusion.

From time to time, the Company may elect to employ antidilutive measures such as a stock buyback program.

These measures could inadvertently create additional 10% U.S. shareholders and thus trigger adverse tax consequences for those shareholders as described above.

We urge shareholders to consult their individual tax advisers for advice regarding the 2017 Act revisions to the U.S. Federal income tax law applicable to owners of CFCs given the current uncertainty regarding their scope of applicability.

Some of our products also use satellite signals from the Russian GLONASS System.

Other countries, including China and India, are in the process of creating their own GNSS systems, and we either have developed or will develop products which use GNSS signals from these systems.

The European community is developing an independent radio navigation satellite system, known as Galileo.

National or European authorities may provide preferential access to signals to companies associated with their markets, including our competitors, which could harm our competitive position.

Use of non-US GNSS signals may also be subject to FCC waiver requirements and to restrictions based upon international trade or geopolitical considerations.

If we are unable to develop timely and competitive commercial products using these systems, or obtain timely and equal access to service signals, it could result in lost revenue.

Natural disasters, catastrophic events, or climate change could affect our financial results.

Natural disasters and extreme weather events, such as tsunamis or earthquakes, could occur in a region where we have a manufacturing or warehousing facility which would cause disruptions in our business operations or loss of inventory.

If our backup and recovery plans are not sufficient to minimize business disruption and/or if our insurance is not sufficient to recover the costs associated with these types of events, our financial results could be adversely affected.

Climate change can also pose a risk to our business due to evolving regulatory and legislative measures surrounding climate change.

| | 19 | |

Corporate reform being considered in the United States could significantly change our tax liability such as proposals to remove certain domestic deductions, implement border adjustments, and/or broaden the circumstances under which foreign corporations could be considered resident in the United States.

The United Kingdom (UK) held a referendum on June 23, 2016 in which a majority of voters voted to exit the European Union (EU).

We do not believe that we, or any of our United States or non-United States subsidiaries, are currently a ‘‘passive foreign investment company’’ for United States federal income tax purposes.

We do not expect to become a passive foreign investment company.

However, because the passive foreign investment company determination is made annually based on whether the company’s income or assets meet certain thresholds as determined under United States federal tax principles which are based on facts and circumstances that may be beyond our control, we cannot assure that we will not become a passive foreign investment company in the future.

If we are a passive foreign investment company in any year, then any of our shareholders that is a United States person could be liable to pay tax on their pro rata share of our income plus an interest charge upon some distributions by us or when that shareholder sells our common shares at a gain.

Further, if we are classified as a passive foreign investment company in any year in which a United States person is a shareholder, we generally will continue to be treated as a passive foreign investment company with respect to such shareholder in all succeeding years, regardless of whether we continue to satisfy the income or asset tests mentioned above.

We do not believe that we, or any of our United States or non-United States subsidiaries, are currently a Controlled Foreign Corporation (CFC) for United States federal income tax purposes.

We do not expect to become a CFC.

The CFC determination is made daily based on whether the United States shareholders own more than fifty percent of the voting power or value of the Company.

Only United States persons that own ten percent or more of the voting power of the Company’s shares qualify as United States shareholders.

Currently the Company has two shareholders that qualify as United States shareholders owning greater than ten percent of the voting power, totaling 36% of the outstanding shares.

Thus, the addition of even one additional ten percent or greater United States shareholder could result in classification as a CFC and subject all such holders to significant tax consequences.

If the Company were to be classified as a CFC for an uninterrupted thirty-day period in any year, the Company’s shareholders that qualify as United States shareholders could be liable to pay US income tax at ordinary income tax rates on their pro-rata share of certain categories of the Company’s income for the period in which the Company is classified as a CFC.

As the Company cannot control the ownership of the Company’s stock nor can the Company control which shareholders participate in the Company’s stock buyback program, ownership changes could result that create United States shareholders which increase the risk of Garmin being treated as a CFC.

We depend on third party licensors for the digital map data contained in our auto products, and our business and/or gross margins could be harmed if we become unable to continue licensing such mapping data or if the royalty costs for such data rise.

We license digital mapping data for use in our products from various sources.

Here Acquisition B.V. and TomTom N.V. are also competitors of Garmin.

We may be exposed to certain regulatory and financial risks related to climate change.

Various regulatory and legislative measures to address greenhouse gas emissions are in different phases of implementation or discussion.

As mentioned previously, we do not believe that we, or any of our United States or non-United States subsidiaries, are currently a Controlled Foreign Corporation (CFC) for United States federal income tax purposes.

However, the repurchase of the Company’s shares reduces the number of shares outstanding which is the basis for determining the ownership percentages for determination of whether the United States shareholders own more than fifty percent of the voting power or value of the Company.

We may be limited in the number of shares we repurchase due to United States shareholders holding percentages.

[removed: We] [added: Except as may be required by law, we] do not undertake to update any forward-looking statements in this Form 10-K.

Fiscal year [removed: 2016] [added: 2017] contains [removed: 53] [added: 52] weeks compared to [removed: 52] [added: 53] weeks for [removed: 2015] [added: 2016] and [removed: 2014.][added: 52 weeks for 2015.]

| Revenue Recognition | Note 2 [removed: -] [added: –] Summary of Significant Accounting Policies |

| Trade Accounts Receivable | Note 2 [removed: -] [added: –] Summary of Significant Accounting Policies |

| [removed: Loan Receivable] [added: Inventories] | Note 2 [removed: -] [added: –] Summary of Significant Accounting Policies |

| [removed: Warranties] [added: Product Warranty] | Note 2 [removed: -] [added: –] Summary of Significant Accounting Policies |

| [removed: Inventory] [added: Sales Programs] | Note 2 [removed: -] [added: –] Summary of Significant Accounting Policies |

| Long-Lived Assets [removed: (including Goodwill)] [added: & Goodwill] | Note 2 [removed: -] [added: –] Summary of Significant Accounting Policies |

| [removed: Investments] [added: Marketable Securities] | Note 2 [removed: -] [added: –] Summary of Significant Accounting Policies & Note 3 [removed: -] [added: –] Marketable Securities |

| Income Taxes | Note 2 [removed: -] [added: –] Summary of Significant Accounting Policies & Note 6 [removed: -] [added: –] Income Taxes |

| [removed: Stock Based] [added: Stock-Based] Compensation | Note 2 [removed: -] [added: –] Summary of Significant Accounting Policies & Note 9 [removed: -] [added: –] Stock Compensation Plans |

[removed: Therefore, we believe that] [added: Our sales are largely of a consumer nature; therefore,] backlog levels are not necessarily indicative of our future sales [removed: results, and backlog information is not material to the understanding of our business.][added: results.]

[removed: Sales] [added: Typically, sales] of our consumer products are [removed: generally higher] [added: highest] in the fourth quarter, due to increased demand during the holiday buying season, [removed: and, to a lesser extent,] [added: and in] the second quarter, due to increased demand during the spring and summer season.

Our aviation [added: and auto OEM] products do not experience much seasonal variation, but are more influenced by the timing of aircraft certifications and the release of new products when the initial demand is typically the strongest.

In recent years, pricing has stabilized in [removed: auto,] [added: auto] allowing for relatively stable gross margins excluding the impact of deferred revenues and costs.

The majority of our research and development costs represent salaries for our [removed: engineers, costs for high technology components] [added: engineers] and costs of test equipment [added: and components] used in product and prototype development.

| | | [removed: 53-weeks] [added: 52-weeks] ended | | | | [removed: 52-weeks] [added: 53-weeks] ended | | | | 52-weeks ended | | |

| | | Dec. [removed: 31,] [added: 30,] | | | | Dec. [removed: 26,] [added: 31,] | | | | Dec. [removed: 27,] [added: 26,] | | |

| | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Cost of goods sold | | | [removed: 44] [added: 42] | % | | | [removed: 45] [added: 44] | % | | | [removed: 44] [added: 45] | % |

| Gross profit | | | [removed: 56] [added: 58] | % | | | [removed: 55] [added: 56] | % | | | [removed: 56] [added: 55] | % |

| Advertising | | | [removed: 6] [added: 5] | % | | | 6 | % | | | [removed: 5] [added: 6] | % |

| Selling, general and administrative | | | 14 | % | | | 14 | % | | | [removed: 13] [added: 14] | % |

| Research and development | | | [removed: 16] [added: 17] | % | | | [removed: 15] [added: 16] | % | | | [removed: 14] [added: 15] | % |

| Total operating expenses | | | [removed: 35] [added: 36] | % | | | 35 | % | | | [removed: 32] [added: 35] | % |

| Operating income | | | [removed: 21] [added: 22] | % | | | [removed: 19] [added: 21] | % | | | [removed: 24] [added: 19] | % |

| Other income, net | | | 0 | % | | | [removed: 1] [added: 0] | % | | | 1 | % |

| Income before income taxes | | | [removed: 21] [added: 22] | % | | | [removed: 20] [added: 21] | % | | | [removed: 25] [added: 20] | % |

| Provision [added: (benefit)] for income taxes | | | [removed: 4] [added: (0] | [removed: %] [added: )%] | | | 4 | % | | | [removed: 13] [added: 4] | % |

| Net income | | | [removed: 17] [added: 23] | % | | | [removed: 16] [added: 17] | % | | | [removed: 13] [added: 16] | % |

In [removed: 2016] [added: 2016,] the Company moved action camera related revenue and expenses from the outdoor segment to the auto segment, allowing for alignment and synergies with other camera-based efforts occurring within the auto segment.

However, action camera related operating results for the 52-weeks ended December 26, 2015 [removed: and December 27, 2014 have] [added: has] been recast to conform to the [removed: current year] [added: 2017 and 2016] presentation.

For each line item in the [removed: table,] [added: table] the total of the segments’ amounts equals the amount in the consolidated statements of income data included in Item 6.

| 52-weeks ended December [removed: 27, 2014] [added: 30, 2017] | | Outdoor | | | | Fitness | | | | Marine | | | | Auto | | | | Aviation | | |

Net sales increased [removed: 7%] [added: 2%] in [removed: 2016] [added: 2017] when compared to the year-ago period.

Auto revenue remains the largest portion of our revenue mix at 29% in the 53-weeks ended [added: December 31,] 2016 compared to 38% in the 52-weeks ended [added: December 26,] 2015.

Auto segment revenue decreased [removed: 17%] [added: 15%] from the year-ago period, primarily due to the ongoing PND market contraction.

Outdoor, fitness, marine, and aviation revenues increased 33%, 24%, 16%, and 10%, respectively, when compared to the [removed: year-ago] [added: prior year] period, primarily due to increases in sales volumes.

[removed: In the] [added: The] auto [removed: segment, the] [added: segment] cost of goods decline was largely consistent with the segment revenue decline.

The average [removed: return] [added: returns] on cash and [removed: investments] [added: investments, including interest and capital gain/loss returns,] during the 53-weeks ended December 31, 2016 and the 52-weeks ended December 26, 2015 were 1.5% and 1.2%, respectively.

| | 41 | |

| Recently Issued Accounting Pronouncements – Revenue from Contracts with Customers | Note 2 – Summary of Significant Accounting Policies |

| Legal and Other Contingencies | Note 2 – Summary of Significant Accounting Policies & Note 4 – Commitments and Contingencies |

We aim to achieve a quick turnaround on orders we receive, and we typically ship most orders within 72 hours.

| Net sales | | $ | 698,867 | | | $ | 762,194 | | | $ | 374,001 | | | $ | 750,583 | | | $ | 501,359 | |

| Cost of goods sold | | | 250,457 | | | | 339,558 | | | | 161,409 | | | | 422,662 | | | | 129,754 | |

| Gross profit | | | 448,410 | | | | 422,636 | | | | 212,592 | | | | 327,921 | | | | 371,605 | |

| Advertising expense | | | 41,113 | | | | 75,660 | | | | 16,101 | | | | 25,639 | | | | 6,180 | |

| Selling, general and administrative expenses | | | 98,914 | | | | 119,537 | | | | 83,765 | | | | 107,995 | | | | 27,766 | |

| Research and development expense | | | 58,516 | | | | 80,674 | | | | 62,398 | | | | 126,320 | | | | 183,726 | |

| Total operating expenses | | | 198,543 | | | | 275,871 | | | | 162,264 | | | | 259,954 | | | | 217,672 | |

| Operating income | | $ | 249,867 | | | $ | 146,765 | | | $ | 50,328 | | | $ | 67,967 | | | $ | 153,933 | |

| Outdoor | | $ | 698,867 | | | | 23 | % | | $ | 546,326 | | | | 18 | % | | $ | 152,541 | | | | 28 | % |

| Fitness | | | 762,194 | | | | 25 | % | | | 818,486 | | | | 27 | % | | | (56,292 | ) | | | \-7 | % |

| Marine | | | 374,001 | | | | 12 | % | | | 331,947 | | | | 11 | % | | | 42,054 | | | | 13 | % |

| Auto | | | 750,583 | | | | 24 | % | | | 882,558 | | | | 29 | % | | | (131,975 | ) | | | \-15 | % |

| Aviation | | | 501,359 | | | | 16 | % | | | 439,348 | | | | 15 | % | | | 62,011 | | | | 14 | % |

| Total | | $ | 3,087,004 | | | | 100 | % | | $ | 3,018,665 | | | | 100 | % | | $ | 68,339 | | | | 2 | % |

Outdoor, marine, and aviation segments had an increase in revenue, while fitness and auto segments had a decrease in revenue.

Fitness revenue represented the largest portion of our revenue mix at 25% in 2017, which was a slight decline from 27% in 2016.

Auto revenue represented the largest portion of our revenue mix in 2016 at 29% and declined to 24% in 2017.

Total unit sales decreased 8% to 15.4 million units in the 52-weeks ended 2017 from 16.8 million units in the 53-weeks ended 2016.

Fitness segment revenue decreased 7% from the year-ago period, primary driven by the general decline of the basic activity tracker market.

Outdoor, marine, and aviation revenues increased 28%, 13%, and 14%, respectively when compared to the year-ago period.

Growth in outdoor was driven by growth in our wearables and subscriptions categories.

Our marine segment revenue increased primarily due to growth in chartplotters, fishfinders, and entertainment systems, and the newly acquired Navionics.

| | | 52-weeks ended December 30, 2017 | | | | | | | | 53-weeks ended December 31, 2016 | | | | | | | | Year over Year | | | | | | |

| Outdoor | | $ | 250,457 | | | | 36 | % | | $ | 205,822 | | | | 38 | % | | $ | 44,635 | | | | 22 | % |

| Fitness | | | 339,558 | | | | 45 | % | | | 381,281 | | | | 47 | % | | | (41,723 | ) | | | \-11 | % |

| Marine | | | 161,409 | | | | 43 | % | | | 148,238 | | | | 45 | % | | | 13,171 | | | | 9 | % |

| Auto | | | 422,662 | | | | 56 | % | | | 493,811 | | | | 56 | % | | | (71,149 | ) | | | \-14 | % |

| Aviation | | | 129,754 | | | | 26 | % | | | 109,943 | | | | 25 | % | | | 19,811 | | | | 18 | % |

| Total | | $ | 1,303,840 | | | | 42 | % | | $ | 1,339,095 | | | | 44 | % | | $ | (35,255 | ) | | | \-3 | % |

In the outdoor, fitness, and marine segments, the decrease in cost of goods sold as a percent of revenues was a result of a shift in product mix toward higher margin products.

The aviation segment increase in cost of goods sold was generally consistent with the segment revenue increase.

| | | 52-weeks ended December 30, 2017 | | | | | | | | 53-weeks ended December 31, 2016 | | | | | | | | Year over Year | | | | | | |

| Outdoor | | $ | 448,410 | | | | 64 | % | | $ | 340,504 | | | | 62 | % | | $ | 107,906 | | | | 32 | % |

| Fitness | | | 422,636 | | | | 55 | % | | | 437,205 | | | | 53 | % | | | (14,569 | ) | | | \-3 | % |

| Marine | | | 212,592 | | | | 57 | % | | | 183,709 | | | | 55 | % | | | 28,883 | | | | 16 | % |

| Auto | | | 327,921 | | | | 44 | % | | | 388,747 | | | | 44 | % | | | (60,826 | ) | | | \-16 | % |

| --- | --- | --- |

Our sales are largely of a consumer nature, and there is a relatively short cycle between order and shipment.

We typically ship most orders within 72 hours of receipt.

Sales of consumer products are also influenced by the timing of the release of new products.

The overall impact of the move was immaterial.

| Net sales | | $ | 409,847 | | | $ | 568,440 | | | $ | 248,371 | | | $ | 1,258,085 | | | $ | 385,915 | |

| Cost of goods sold | | | 143,188 | | | | 210,153 | | | | 118,661 | | | | 688,742 | | | | 105,502 | |

| Gross profit | | | 266,659 | | | | 358,287 | | | | 129,710 | | | | 569,343 | | | | 280,413 | |

| Advertising expense | | | 28,650 | | | | 52,606 | | | | 12,353 | | | | 46,245 | | | | 6,779 | |

| Selling, general and administrative expenses | | | 52,203 | | | | 75,747 | | | | 42,975 | | | | 177,649 | | | | 23,458 | |

| Research and development expense | | | 29,747 | | | | 39,252 | | | | 48,150 | | | | 134,774 | | | | 143,198 | |

| Total operating expenses | | | 110,600 | | | | 167,605 | | | | 103,478 | | | | 358,668 | | | | 173,435 | |

| Operating income | | $ | 156,059 | | | $ | 190,682 | | | $ | 26,232 | | | $ | 210,675 | | | $ | 106,978 | |

This was largely offset by the U.S. Dollar strengthening 3.8% against the Taiwan Dollar, resulting in a gain of $19.5 million.

Partially offset by:

As described in Note 14, the Company expects to revalue certain Switzerland deferred tax assets, for which the Company anticipates recording approximately $150 million of income tax benefit in the first quarter of 2017.

This may result in cash outlays for income taxes exceeding income tax expense recognized in certain future periods.

| Outdoor | | $ | 411,184 | | | | 15 | % | | $ | 409,847 | | | | 14 | % | | $ | 1,337 | | | | 0 | % |

| Fitness | | | 661,599 | | | | 23 | % | | | 568,440 | | | | 20 | % | | | 93,159 | | | | 16 | % |

| Marine | | | 286,778 | | | | 10 | % | | | 248,371 | | | | 9 | % | | | 38,407 | | | | 15 | % |

| Auto | | | 1,062,091 | | | | 38 | % | | | 1,258,085 | | | | 44 | % | | | (195,994 | ) | | | \-16 | % |

| Aviation | | | 398,618 | | | | 14 | % | | | 385,915 | | | | 13 | % | | | 12,703 | | | | 3 | % |

| Total | | $ | 2,820,270 | | | | 100 | % | | $ | 2,870,658 | | | | 100 | % | | $ | (50,388 | ) | | | \-2 | % |

Net sales decreased 2% in 2015 when compared to fiscal year 2014.

All segments, excluding aviation, were impacted by revenues denominated in currencies that weakened against the U.S. Dollar during the period.

In total, it is estimated that the strong U.S. Dollar reduced revenues by approximately $189 million, which represents 6% of revenue.

Auto revenue remains the largest portion of our revenue mix at 38% in the fiscal year 2015 compared to 44% in the fiscal year 2014.

Total unit sales increased 7% to 16.2 million units in 2015 from 15.1 million units in 2014.

The increase in unit sales volume was attributable to fitness and marine volumes partially offset by declines in each of the other segments.

Auto segment revenue decreased 16% from fiscal year 2014, as both the contribution of amortization of previously deferred revenue declined when compared to 2014 and volumes declined.

Fitness revenues increased 16% on the strength of our wearables portfolio.

Aviation revenues increased 3% from fiscal year 2014 as market share gains were partially offset by industry weakness.

Outdoor revenues remained relatively flat to fiscal year 2014, as geographic exposure to weak currencies and maturing product categories were largely offset by the strength of outdoor wearables.

Revenues in our marine segment increased 15% as the release of new marine products drove strong revenue growth.

| Outdoor | | $ | 156,306 | | | | 38 | % | | $ | 143,188 | | | | 35 | % | | $ | 13,118 | | | | 9 | % |

| Fitness | | | 295,460 | | | | 45 | % | | | 210,153 | | | | 37 | % | | | 85,307 | | | | 41 | % |

| Marine | | | 128,285 | | | | 45 | % | | | 118,661 | | | | 48 | % | | | 9,624 | | | | 8 | % |

| Auto | | | 597,611 | | | | 56 | % | | | 688,742 | | | | 55 | % | | | (91,131 | ) | | | \-13 | % |

| Aviation | | | 103,904 | | | | 26 | % | | | 105,502 | | | | 27 | % | | | (1,598 | ) | | | \-2 | % |

| Total | | $ | 1,281,566 | | | | 45 | % | | $ | 1,266,246 | | | | 44 | % | | $ | 15,320 | | | | 1 | % |

Based on monetary assets and liabilities denominated in currencies other than respective functional currencies as of December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015,] [added: 31, 2016,] hypothetical and reasonably possible adverse changes of 10% for the Taiwan Dollar, Euro, and British Pound Sterling would have resulted in an adverse impact on income before income taxes of approximately [removed: $92] [added: $96] million and [removed: $95] [added: $92] million at December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015.][added: 31, 2016.]

We have no outstanding long-term debt as of December [removed: 31, 2016.][added: 30, 2017.]

During [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] the Company did not record any material impairment charges on its outstanding securities.

Based on balance sheet positions as of December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015,] [added: 31, 2016,] the hypothetical and reasonably possible 100 basis point increases in interest rates across all securities would have resulted in declines in portfolio fair market value of approximately [removed: $45] [added: $42] million and [removed: $43] [added: $45] million at December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015.][added: 30, 2016, respectively.]

During fiscal year 2017, the Company incurred a net foreign currency loss of $22.6 million, primarily due to the weakening of the U.S. Dollar against the Taiwan Dollar, partially offset by the U.S. Dollar weakening against the Euro and the British Pound Sterling.

During fiscal 2017, the U.S. Dollar weakened 9.4% against the Taiwan Dollar, resulting in a loss of $55.9 million, while the U.S. Dollar weakened 14.1% against the Euro and 9.5% against the British Pound Sterling, resulting in gains of $27.2 million and $3.1 million, respectively.

The remaining net currency gain of $3.0 million is related to other currencies and timing of transactions.

These and other currency moves during fiscal year 2017 also resulted in a currency translation adjustment of $88.3 million within accumulated other comprehensive income.

| | 55 | |

| | 56 | |

| | 57 | |

During fiscal year 2016, the U.S. Dollar weakened 1.7% against the Taiwan Dollar resulting in a $9.2 million foreign currency loss.

The U.S. Dollar strengthened 4.2% against the Euro resulting in a foreign currency loss of $13.0 million.

The U.S. Dollar strengthened 16.8% against the British Pound Sterling resulting in a loss of $5.1 million.

The net result of these currency moves combined with other net losses of $4.4 million, and the timing of transactions during the year was a net loss of $31.7 million for the Company and a currency translation adjustment of $4.7 million during the fiscal year 2016.

| | 58 | |

This discussion of the business of Garmin Ltd. ("Garmin" or the "Company") should be read in conjunction with, and is qualified by reference to, “Management's Discussion and Analysis of Financial Condition and Results of Operations” under Item 7 herein and the information set forth in response to Item 101 of Regulation S-K in such Item 7 is incorporated herein by reference in partial response to this Item 1.

Garmin has identified five reportable segments for external reporting purposes: auto, aviation, marine, outdoor and fitness.

There are two operating segments (auto PND and auto OEM) that are not reported separately but are aggregated within the auto reportable segment.

Each operating segment is individually reviewed and evaluated by our Chief Operating Decision Maker (CODM), who allocates resources and assesses performance of each segment individually.

The segment and geographic information included in Item 8, “Financial Statements and Supplementary Data,” under Note 8 is incorporated herein by reference in partial response to this Item 1.

Garmin was incorporated in Switzerland on February 9, 2010 as successor to Garmin Ltd., a Cayman Islands company (“Garmin Cayman”).

Garmin Cayman was incorporated on July 24, 2000 as a holding company for Garmin Corporation, a Taiwan corporation, in order to facilitate a public offering of Garmin Cayman shares in the United States.

On June 27, 2010, Garmin became the ultimate parent holding company of the Garmin group of companies pursuant to a share exchange transaction effected for the purpose of changing the place of incorporation of the ultimate parent holding company of the Garmin group from the Cayman Islands to Switzerland (the “Redomestication”).

Pursuant to the Redomestication, all issued and outstanding Garmin Cayman common shares were transferred to Garmin and each common share, par value U.S. $0.005 per share, of Garmin Cayman was exchanged for one registered share, par value 10 Swiss francs (CHF) per share, of Garmin.

At the Company’s Annual General Meeting on June 10, 2016, the Company’s shareholders approved the cancellation of 10,000,000 registered shares of the Company held by the Company (the “Formation Shares”) and the reduction in par value of each share of the Company from CHF 10 to CHF 0.10 and the amendment of the Company’s Articles of Association to effect a corresponding share capital reduction.

This share cancellation has reduced authorized shares from 208,077,418 shares to 198,077,418 shares, with an incremental 99,038,709 conditional shares that may be issued through the exercise of option rights, which are granted to Garmin employees or members of its Board of Directors.

Garmin owns, directly or indirectly, all of the operating companies in the Garmin group.

| | 3 | |

| --- | --- | --- |

Garmin’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statement and Forms 3, 4 and 5 filed by Garmin’s directors and executive officers and all amendments to those reports will be made available free of charge through the Investor Relations section of Garmin’s website (http://www.garmin.com) as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (the “SEC”).

The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The reference to Garmin’s website address does not constitute incorporation by reference of the information contained on this website, and such information should not be considered part of this report on Form 10-K.

Company Overview

For over 25 years, Garmin Ltd. and subsidiaries (together, the “Company”) has pioneered new Global Positioning System (GPS) navigation and wireless devices and applications that are designed for people who live an active lifestyle.

Garmin serves five primary business units, including auto, aviation, fitness, marine, and outdoor.

We believe it is through these business units that Garmin is able to achieve synergies in raw material purchases, manufacturing, distribution, research and development and marketing efforts making for a stronger, more effective company.

Garmin designs, develops, manufactures, markets and distributes a diverse family of hand-held, wearable, portable and fixed-mount GPS-enabled products and other navigation, communications, sensor-based and information products.

Since the inception of its business, Garmin has delivered over 173 million products, which includes the delivery of more than 16 million products during 2016.

Overview of the Global Positioning System

The Global Positioning System is a worldwide navigation system which enables the precise determination of geographic location using established satellite technology.

The system consists of numerous constellations of orbiting satellites.

Access to the systems is provided free of charge.

Garmin utilizes a variety of global navigation satellite systems (GNSS) including, but not limited to:

| | · | The satellites and their ground control and monitoring stations maintained and operated by the United States Department of Defense, which maintains an ongoing satellite replenishment program to ensure continuous global system coverage. |

| --- | --- | --- |

| | · | Japan’s MTSAT-based Satellite Augmentation System (MSAS) which achieved initial operating capability for enroute, terminal and approach navigation for aviation on September 27, 2007. |

| --- | --- | --- |

| | · | The European Geostationary Navigation Overlay Service (EGNOS) aviation Safety of Life (SoL) service which achieved initial operating capability for enroute, terminal, and approach navigation on March 2, 2011. |

| --- | --- | --- |

| | · | The Global Navigation Satellite System (GLONASS), a space-based satellite navigation system operated by the Russian Federation, consisting of 24 satellites and providing world-wide coverage. In certain urban canyon or restricted sky visibility situations, the use of both GPS and GLONASS satellites to produce a navigation fix may result in improved accuracy. |

| --- | --- | --- |

| | · | On a subscription basis, certain Garmin products offer access to the Iridium satellite network, a synchronized constellation of 66 low Earth orbit (LEO) satellites offering global data communication coverage. The Iridium network is the only network that spans the entire globe, offering 100 percent coverage worldwide to enable satellite-based communication. |

| --- | --- | --- |

The accuracy and utility of GPS can be enhanced through augmentation techniques which compute any remaining errors in the signal and broadcast these corrections to a GPS device.

The Federal Aviation Administration (“FAA”) has developed a Wide Area Augmentation System (WAAS) comprising ground reference stations and additional satellites that improve the accuracy of GPS positioning available in the United States and most of Canada and Mexico to approximately 3 meters.

On [removed: January 27, 2016, Navico filed a petition for review of the ITC’s Final Determination in] [added: June 13, 2017,] the U.S. Court of Appeals for the Federal Circuit [removed: (the “Federal Circuit”).][added: (“Federal Circuit”) reversed the ITC’s Final Determination.]

On [removed: February 16, 2016] [added: August 30, 2016,] Navico filed a request that the ITC initiate an enforcement proceeding [removed: in connection with] [added: for] alleged violations by Garmin of the [removed: ITC’s] [added: previous] cease and desist [removed: orders.][added: orders issued by the ITC.]

On March 4, 2016, Navico [removed: Inc. and Navico Holding AS] filed suit in the United States District Court for the Eastern District of Texas, Marshall [removed: Division, against Garmin International, Inc. and Garmin USA, Inc. (collectively, “Garmin”)] [added: Division] alleging [removed: infringement of U.S. Patents 9,223,022 (“the ’022 patent”) and 9,244,168 (“the ’168 patent”).][added: the Company infringed upon two specific Navico patents relating to downscan sonar.]

On November 11, 2016, PulseOn Oy filed suit in the Patents Court in London, England, against Garmin (Europe) Ltd. alleging infringement of alleged UK unregistered design rights and Registered European Community Design No. 002473769-0004 (the [removed: “ 0004] [added: “0004] Design”) and Registered European Community Design No. [removed: 002473769-0005] [added: 002473769-005] (the [removed: “ 0005] [added: “0005] Design”) by certain Garmin products with wrist-worn heart rate monitors.

The Company settled or resolved certain [added: other] matters during the fiscal year ended December [removed: 31, 2016] [added: 30, 2017] that did not individually or in the aggregate have a material impact on the Company’s financial condition or results of operations.

On June 9, 2014 Navico Inc. and Navico Holding AS (collectively “Navico”) filed a complaint with the United States International Trade Commission (“ITC”) alleging the Company infringed upon three specific Navico patents relating to downscan sonar.

On December 1, 2015, the ITC issued a Final Determination concluding that there was infringement by Garmin.

On May 26, 2017, the Administrative Law Judge issued his initial enforcement determination concluding that Garmin’s sale of certain DownVü sonar products violated the ITC’s December 2015 orders and recommended a civil penalty of $37 million.

Specifically, the Federal Circuit ruled that the two of the three patents in the suit are invalid and that Garmin does not infringe upon the third patent.

The ITC stayed the issuance of a final determination in this enforcement proceeding pending the issuance by the Federal Circuit of its mandate.

The Federal Circuit issued its mandate on October 31, 2017.

Pursuant to the settlement agreement described below on February 14, 2018, Garmin and Navico filed a joint motion to terminate the enforcement proceeding.

On June 4, 2014 Navico filed suit in the United States District Court for the Northern District of Oklahoma alleging the Company infringed upon the same three specific Navico patents relating to downscan sonar that are the subject of their complaint filed with ITC discussed above.

On January 15, 2016 the court issued an order staying this lawsuit pending the final determination of any appeal filed with the Federal Circuit concerning that ITC complaint.

On October 31, 2017 the Federal Circuit issued its mandate in that appeal holding that two of the three patents in suit are invalid and that Garmin does not infringe upon the third patent.

On November 14, 2017, the Oklahoma court lifted the stay and set a briefing schedule.

The parties have submitted briefing on the effect of the Federal Circuit’s decision and the court scheduled a hearing on March 12, 2018.

This lawsuit was dismissed with prejudice on February 13, 2018 pursuant to the settlement agreement described below.

On September 8, 2017, a jury returned a verdict finding that Garmin had willfully infringed upon those two patents and awarded damages of $38 million.

No judgment was entered by the court.

This lawsuit was dismissed with prejudice on February 13, 2018 pursuant to the settlement agreement described below.

On January 24, 2018, Garmin and Navico agreed on a global settlement of all pending litigation between them.

The settlement is not material to the Company’s financial condition or results of operations.

The parties have agreed to keep the terms of the settlement confidential.

A trial was held in November 2017.

During the trial PulseOn abandoned its claim of infringement of alleged UK unregistered design rights.

On January 18, 2018 the court issued a judgment holding that no accused Garmin products infringed either the 0004 Design or the 0005 Design.

_Andrea Katz, on behalf of herself and all others similarly situated, v.

Garmin Ltd. and Garmin International, Inc._

On December 18, 2013, a purported class action lawsuit was filed against Garmin International, Inc. and Garmin Ltd. in the U.S. District Court for the Northern District of Illinois.

The lead plaintiff was Andrea Katz, on behalf of herself and all others similarly situated.

The class of plaintiffs that Andrea Katz purported to represent includes all individuals who purchased any model of Forerunner watch in the State of Illinois and the United States.

Plaintiff asserted claims for breach of contract, breach of express warranty, breach of implied warranties, negligence, negligent misrepresentation, and violations of Illinois statutory law.

Plaintiff alleged that Forerunner watch bands have an unacceptable rate of failure in that they detach from the watch.

Plaintiff sought compensatory and punitive damages, prejudgment interest, costs, and attorneys’ fees, and injunctive relief.

On January 29, 2014 the court dismissed the lawsuit without prejudice.

On January 30, 2014, the plaintiff re-filed the lawsuit with the same claims for relief as the earlier action and adding an additional claim for unjust enrichment.

On February 4, 2014, the court ordered the case to be transferred to the United States District Court for the District of Utah.

The plaintiff voluntarily dismissed the case filed in Illinois and, on March 6, 2014, she refiled the lawsuit in the District Court for the District of Utah with the same claims, but with additional claims for violations of the Utah Consumers Sales Practice Act, Lanham Act, and Utah Truth in Advertising Act.

The relief she requested is the same.

On March 31, 2014, Garmin filed a motion to transfer the venue of the Utah action back to the Northern District of Illinois.

On October 21, 2014, the United States District Court for the District of Utah denied Garmin’s motion to transfer venue.

On December 26, 2014, Garmin filed a motion to dismiss certain counts of the complaint.

On April 16, 2015 the court granted Garmin’s motion in part and dismissed with prejudice (i) Mr. Katz’s (but not Mrs. Katz’s) claim for breach of the implied warranty of merchantability, (ii) the plaintiffs’ Lanham Act claim, (iii) the plaintiffs’ negligence claim and (iv) the plaintiffs’ negligent misrepresentation claim.

No class was certified.

The parties agreed to settle the lawsuit in consideration of a settlement under which Garmin would pay the plaintiff’s counsel $385,000 in attorneys’ fees and would repair or replace Forerunner 610 watchbands and watches at no cost provided that a request is made within twelve months of the date of the final approval of the settlement by the court.

On November 3, 2016 the court granted final approval of the settlement.

On June 9, 2014 Navico Inc. and Navico Holding AS filed a complaint with the United States International Trade Commission (“ITC”) against Garmin International, Inc., Garmin North America, Inc., Garmin USA, Inc. and Garmin (Asia) Corporation (collectively “Garmin”) alleging a violation of Section 337 of the Tariff Act of 1930, as amended, through alleged infringement by Garmin of U.S. Patents 8,300,499 (“the ’499 patent”); 8,305,840 (“the ’840 patent”); and 8,605,550 (“the ’550 patent”).

On July 9, 2014 the ITC instituted an investigation pursuant to the complaint.

Garmin believes that each asserted claim of the ‘499 patent, the ‘840 patent, and the ‘550 patent is invalid and/or not infringed.

A trial hearing before the Administrative Law Judge was held on March 18 through March 24, 2015.

The Administrative Law Judge issued his initial determination on July 2, 2015 finding that the asserted claims of the ‘840, ‘499 and ‘550 patents are valid but that there is no infringement by Garmin of the ‘840 patent, the ‘499 patent or the ‘550 patent.

On December 1, 2015 the ITC issued a Final Determination finding that most of the asserted claims of the ‘840, ‘499 and ‘550 patents are valid and that there is no infringement by Garmin of the ‘499 patent but that there is infringement by Garmin of the ‘840 and ‘550 patents.

The ITC held that claims 1, 7, 12, 13, and 57 of the ‘550 patent were invalid as obvious.

The ITC issued a limited exclusion order prohibiting the import into the USA of infringing products and cease and desist orders prohibiting certain domestic activities relating to the infringing products.

On February 10, 2016, Garmin filed with the Federal Circuit: (i) a motion to intervene in Navico's appeal, and (ii) a petition for review of the abovementioned Final Determination.

Garmin is seeking review of all issues appealable in the case, including the portions of the Final Determination finding infringement of the ’840 and ’550 patents.

On June 3, 2016 Navico withdrew, without prejudice, its request that the ITC initiate an enforcement proceeding.

On May 20, 2016 Navico filed a petition for modification of the limited exclusion order issued by the ITC.

On June 1, 2016 Garmin filed its opposition to Navico’s petition for modification of the limited exclusion order.

On June 9, 2016 Navico filed a reply to Garmin’s opposition.

On June 10, 2016 Navico filed a motion for leave to file said reply.

On June 20, 2016 Garmin filed an opposition to Navico’s motion for leave to file a reply.

On August 18, 2016 the International Trade Commission (“ITC”) granted Navico’s petition for modification of the limited exclusion order and issued a modified limited exclusion order.

On August 24, 2016 Garmin filed with the ITC a motion to stay the modified limited exclusion order pending Garmin’s appeal of this order.

On August 29, 2016 Garmin filed a notice of appeal against the ITC’s modified limited exclusion order to the Federal Circuit.

On August 30, 2016 Garmin filed with the Federal Circuit Court of Appeals a motion for an interim stay of the ITC’s modified exclusion order and a stay of such order pending resolution of Garmin’s appeal.

| [added: |] x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the fiscal year ended December [removed: 31, 2016][added: 30, 2017]

| [added: |] ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the transition period from [removed: _____ to _____][added: ___________to__________]

[removed: ][added: ]

| Registered Shares, CHF 0.10 Per Share Par Value | [removed: | NASDAQ Global Select Market] [added: The Nasdaq Stock Market, LLC] |

| (Title of each class) | [removed: |] (Name of each exchange on which registered) |

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or a] smaller reporting [added: company, or emerging growth] company.

See the definitions of “large accelerated filer”, “accelerated [removed: filer” and] [added: filer”,] “smaller reporting [added: company”, and “emerging growth] company” in Rule 12b-2 of the Exchange Act.

Aggregate market value of the common shares held by non-affiliates of the registrant as of [removed: June 25, 2016] [added: July 1, 2017] (based on the closing price of the registrant's common shares on the Nasdaq Stock Market for that date) was [removed: $4,939,741,064.][added: $6,129,443,292.]

Number of shares outstanding of the registrant’s common shares as of February [removed: 17, 2017:][added: 16, 2018:]

| [removed: Document] [added: Document] | | Part of Form 10-K into which Incorporated |

| Company's Definitive Proxy Statement for the [removed: 2017] [added: 2018] Annual Meeting of Shareholders which will be filed no later than 120 days after December [removed: 31, 2016.] [added: 30, 2017.] | | Part III |

[removed: 2016] [added: 2017] Form 10-K Annual Report

| | [Cautionary Statement With Respect To Forward-Looking [removed: Comments](#GAR_001)] [added: Comments](#a_001)] | [removed: 3] [added: [3](#a_001)] |

| [removed: [Part I](#GAR_002)] | [added: [Part I](#a_002)] | |

| [removed: Item 1.] [added: [Item 1.](#a_003)] | [removed: [Business](#GAR_003)] [added: [Business](#a_003)] | [removed: 3] [added: [3](#a_003)] |

| [removed: Item 1A.] [added: [Item 1A.](#a_004)] | [Risk [removed: Factors](#GAR_004)] [added: Factors](#a_004)] | [removed: 19] [added: [20](#a_004)] |

| [removed: Item 1B.] [added: [Item 1B.](#a_005)] | [Unresolved Staff [removed: Comments](#GAR_005)] [added: Comments](#a_005)] | [removed: 31] [added: [33](#a_005)] |

| [removed: Item 2.] [added: [Item 2.](#a_006)] | [removed: [Properties](#GAR_006)] [added: [Properties](#a_006)] | [removed: 32] [added: [33](#a_006)] |

| [removed: Item 3.] [added: [Item 3.](#a_007)] | [Legal [removed: Proceedings](#GAR_007)] [added: Proceedings](#a_007)] | [removed: 33] [added: [34](#a_007)] |

| [removed: Item 4.] [added: [Item 4.](#a_008)] | [Mine Safety [removed: Disclosures](#GAR_008)] [added: Disclosures](#a_008)] | [removed: 37] [added: [35](#a_008)] |

| | [Executive Officers of the [removed: Registrant](#GAR_009)] [added: Registrant](#a_009)] | [removed: 37] [added: [36](#a_009)] |

| [removed: [Part II](#GAR_010)] | [added: [Part II](#a_010)] | |

| [removed: Item 5.] [added: [Item 5.](#a_011)] | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#GAR_011)] [added: Securities](#a_011)] | [removed: 38] [added: [37](#a_011)] |

| [removed: Item 6.] [added: [Item 6.](#a_012)] | [Selected Financial [removed: Data](#GAR_012)] [added: Data](#a_012)] | [removed: 40] [added: [39](#a_012)] |

| [removed: Item 7.] [added: [Item 7.](#a_013)] | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#GAR_013)] [added: Operations](#a_013)] | [removed: 42] [added: [41](#a_013)] |

| [removed: Item 7A.] [added: [Item 7A.](#a_014)] | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#GAR_014)] [added: Risk](#a_014)] | [removed: 57] [added: [55](#a_014)] |

| [removed: Item 8.] [added: [Item 8.](#a_015)] | [Financial Statements and Supplementary [removed: Data](#GAR_015)] [added: Data](#a_015)] | [removed: 59] [added: [57](#a_015)] |

| [removed: Item 9.] [added: [Item 9.](#a_016)] | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#GAR_023)] [added: Disclosure](#a_016)] | [removed: 93] [added: [92](#a_016)] |

| [removed: Item 9A.] [added: [Item 9A.](#a_017)] | [Controls and [removed: Procedures](#GAR_024)] [added: Procedures](#a_017)] | [removed: 93] [added: [92](#a_017)] |

| [removed: Item 9B.] [added: [Item 9B.](#a_018)] | [Other [removed: Information](#GAR_025)] [added: Information](#a_018)] | [removed: 95] [added: [94](#a_018)] |

| [removed: [Part III](#GAR_026)] | [added: [Part III](#a_019)] | |

| [removed: Item 10.] [added: [Item 10.](#a_020)] | [Directors, Executive Officers and Corporate [removed: Governance](#GAR_027)] [added: Governance](#a_020)] | [removed: 96] [added: [95](#a_020)] |

| [removed: Item 11.] [added: [Item 11.](#a_021)] | [Executive [removed: Compensation](#GAR_028)] [added: Compensation](#a_021)] | [removed: 97] [added: [96](#a_021)] |

| [removed: Item 12.] [added: [Item 12.](#a_022)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#GAR_029)] [added: Matters](#a_022)] | [removed: 97] [added: [96](#a_022)] |

| [removed: Item 13.] [added: [Item 13.](#a_023)] | [Certain Relationships and Related Transactions, and Director [removed: Independence](#GAR_030)] [added: Independence](#a_023)] | [removed: 98] [added: [97](#a_023)] |

| [removed: Item 14.] [added: [Item 14.](#a_024)] | [Principal Accounting Fees and [removed: Services](#GAR_031)] [added: Services](#a_024)] | [removed: 98] [added: [97](#a_024)] |

| [removed: Item 15.] [added: [Item 15.](#a_026)] | [Exhibits, Financial Statement [removed: Schedules](#GAR_033)] [added: Schedules](#a_026)] | [removed: 99] [added: [98](#a_026)] |

| [removed: Item 16.] [added: [Item 16.](#a_027)] | [Form 10-K [removed: Summary](#GAR_035)] [added: Summary](#a_027)] | [removed: 105] [added: [104](#a_027)] |

10-K 1 s109029_10k.htm 10-K

| | 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.

| --- | --- | --- |

| | [Part IV](#a_025) | |

| | [Signatures](#a_028) | [106](#a_028) |

| | Item 1. | Business |

| --- | --- | --- |

This discussion of the business of Garmin Ltd. ("Garmin" or the "Company") should be read in conjunction with, and is qualified by reference to, “Management's Discussion and Analysis of Financial Condition and Results of Operations” under Item 7 herein and the information set forth in response to Item 101 of Regulation S-K in such Item 7 is incorporated herein by reference in partial response to this Item 1.

Garmin has identified five reportable segments for external reporting purposes: auto, aviation, marine, outdoor and fitness.

There are two operating segments (auto PND and auto OEM) that are not reported separately but are aggregated within the auto reportable segment.

Each operating segment is individually reviewed and evaluated by our Chief Operating Decision Maker (CODM), who allocates resources and assesses performance of each segment individually.

The segment and geographic information included in Item 8, “Financial Statements and Supplementary Data,” under Note 8 is incorporated herein by reference in partial response to this Item 1.

Garmin was incorporated in Switzerland on February 9, 2010 as successor to Garmin Ltd., a Cayman Islands company (“Garmin Cayman”).

Garmin Cayman was incorporated on July 24, 2000 as a holding company for Garmin Corporation, a Taiwan corporation, in order to facilitate a public offering of Garmin Cayman shares in the United States.

On June 27, 2010, Garmin became the ultimate parent holding company of the Garmin group of companies pursuant to a share exchange transaction effected for the purpose of changing the place of incorporation of the ultimate parent holding company of the Garmin group from the Cayman Islands to Switzerland (the “Redomestication”).

Pursuant to the Redomestication, all issued and outstanding Garmin Cayman common shares were transferred to Garmin and each common share, par value U.S. $0.005 per share, of Garmin Cayman was exchanged for one registered share, par value 10 Swiss francs (CHF) per share, of Garmin.

At the Company’s Annual General Meeting on June 10, 2016, the Company’s shareholders approved the cancellation of 10,000,000 registered shares of the Company held by the Company (the “Formation Shares”) and the reduction in par value of each share of the Company from CHF 10 to CHF 0.10 and the amendment of the Company’s Articles of Association to effect a corresponding share capital reduction.

This share cancellation has reduced authorized shares from 208,077,418 shares to 198,077,418 shares, with an incremental 99,038,709 conditional shares that may be issued through the exercise of option rights, which are granted to Garmin employees or members of its Board of Directors.

Garmin owns, directly or indirectly, all of the operating companies in the Garmin group.

| | 3 | |

| --- | --- | --- |

Garmin’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statement and Forms 3, 4 and 5 filed by Garmin’s directors and executive officers and all amendments to those reports will be made available free of charge through the Investor Relations section of Garmin’s website (http://www.garmin.com) as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (the “SEC”).

The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The reference to Garmin’s website address does not constitute incorporation by reference of the information contained on this website, and such information should not be considered part of this report on Form 10-K.

Company Overview

For over 25 years, Garmin Ltd. and subsidiaries (together, the “Company”) has pioneered new Global Positioning System (GPS) navigation and wireless devices and applications that are designed for people who live an active lifestyle.

Garmin serves five primary business units, including auto, aviation, fitness, marine, and outdoor.

We believe it is through these business units that Garmin is able to achieve synergies in raw material purchases, manufacturing, distribution, research and development and marketing efforts making for a stronger, more effective company.

Garmin designs, develops, manufactures, markets and distributes a diverse family of hand-held, wearable, portable and fixed-mount GPS-enabled products and other navigation, communications, sensor-based and information products.

Since the inception of its business, Garmin has delivered over 188 million products, which includes the delivery of more than 15 million products during 2017.

Overview of the Global Positioning System

The Global Positioning System is a worldwide navigation system which enables the precise determination of geographic location using established satellite technology.

The system consists of numerous constellations of orbiting satellites.

Access to the systems is provided free of charge.

Garmin utilizes a variety of global navigation satellite systems (GNSS) including, but not limited to:

| | · | The satellites and their ground control and monitoring stations maintained and operated by the United States Department of Defense, which maintains an ongoing satellite replenishment program to ensure continuous global system coverage. |

| --- | --- | --- |

| | · | Japan’s MTSAT-based Satellite Augmentation System (MSAS) which achieved initial operating capability for enroute, terminal and approach navigation for aviation on September 27, 2007. |

| --- | --- | --- |

10-K 1 s105240_10k.htm 10-K

| --- | --- |

| [Part IV](#GAR_032) | | |

| | [Signatures](#GAR_034) | 107 |

| | 31 | |

| --- | --- | --- |

Garmin International, Inc. and Garmin USA, Inc. occupy facilities of approximately 1,215,000 square feet on approximately [removed: 59] [added: 107] acres in Olathe, Kansas, where the majority of product design and development work is conducted, the majority of aviation panel-mount products are manufactured and products are warehoused, distributed, and supported for North, Central and South America.

Garmin International, Inc. [removed: has also broken ground on] [added: continued] an expansion project [added: in 2017] on [removed: that land,] [added: the land in Olathe, Kansas,] which will include an approximately 720,000 square foot manufacturing and distribution center.

Garmin International, Inc. has purchased all the outstanding bonds and [removed: will] [added: expects to continue to] hold the bonds until maturity in order to benefit from property tax abatement.

Garmin International, Inc. leases 148,000 square feet of land at New Century Airport in Gardner, Kansas under a ground lease [added: and occupies two aircraft hangars on this land, one of] which [removed: expires in 2026.][added: is owned (47,000 square feet) and the other leased (53,000 square feet).]

Various Garmin subsidiaries lease an additional: (i) 49,000 square feet of office space in Olathe, Kansas for a call center operation; (ii) approximately 38,000 square feet of office space in Yarmouth, Maine, for office and development [removed: use related to the business Garmin acquired from DeLorme in 2016;] [added: use;] and (iii) approximately 33,000 square feet of office space in Tucson, Arizona, used as offices and for research and development.

The expansion project began in 2016.

| | 33 | |

Both properties serve as flight test and certification facilities that are used in development and certification of aviation products.

Garmin’s subsidiary, Garmin Realty, LLC also owns an additional 34 acres of land in Olathe for expansion.

Garmin International, Inc. owns and occupies a 47,000 square foot aircraft hangar, flight test and certification facility on this land which is used in development and certification of aviation products.

Garmin International, Inc. owns a leasehold interest in an additional 53,000 square foot aircraft hangar, flight test and certification facility at New Century Airport in Gardner, which is also used in development and certification of aviation products.

| | 32 | |

Pursuant to General Instruction G(3) of Form 10-K and instruction 3 to paragraph (b) of Item 401 of Regulation S-K, the following list is included as an unnumbered Item in Part I of this Annual Report on Form 10-K in lieu of being included in the Company’s Definitive Proxy Statement in connection with its annual meeting of shareholders scheduled for June [removed: 9, 2017.][added: 8, 2018.]

Kao, age [removed: 68,] [added: 69,] has served as Executive Chairman of Garmin Ltd. since January 2013 and was previously Chairman of Garmin Ltd. from August 2004 to December 2012 and Co-Chairman of Garmin Ltd. from August 2000 to August 2004.

Pemble, age [removed: 51,] [added: 52,] has served as a director of Garmin Ltd. since August 2004.

Previously, he was Vice President, Engineering of Garmin International, Inc. from 2005 to October 2007, Director of Engineering of Garmin International, Inc. from 2003 to 2005, [added: and] Software Engineering Manager of Garmin International, Inc. from 1995 to [removed: 2002,] [added: 2002] and a Software Engineer with Garmin International, Inc. from 1989 to 1995.

Boessen, age [removed: 54,] [added: 55,] has served as Chief Financial Officer and Treasurer of Garmin Ltd. since July 2014.

Etkind, age [removed: 61,] [added: 62,] has served as Vice President, General Counsel and Secretary of Garmin Ltd. since June 2009.

| | 35 | |

| | 36 | |

| --- | --- | --- |

| | 37 | |

Garmin’s [removed: common] shares have traded on [removed: the] [added: The] Nasdaq Stock [removed: Market] [added: Market,] LLC under the symbol “GRMN” since its initial public offering on December 8, 2000 (the “IPO”).

As of February [removed: 3, 2017,] [added: 16, 2018,] there were [removed: 182] [added: 176] shareholders of record.

The high and low daily closing prices of Garmin’s [removed: common] shares as reported on the Nasdaq Stock Market for each fiscal quarter of fiscal years [removed: 2016] [added: 2017] and [removed: 2015 was] [added: 2016 were] as follows:

| | | December [removed: 31, 2016] [added: 30, 2017] | | | | | | | | December [removed: 26, 2015] [added: 31, 2016] | | | | | | |

| First Quarter | | $ | [removed: 41.44] [added: 54.15] | | | $ | [removed: 32.29] [added: 47.35] | | | $ | [removed: 56.81] [added: 41.44] | | | $ | [removed: 47.47] [added: 32.29] | |

| Second Quarter | | $ | [removed: 43.88] [added: 53.58] | | | $ | [removed: 39.10] [added: 48.69] | | | $ | [removed: 48.13] [added: 43.88] | | | $ | [removed: 44.21] [added: 39.10] | |

| Third Quarter | | $ | [removed: 55.75] [added: 54.04] | | | $ | [removed: 39.68] [added: 49.99] | | | $ | [removed: 46.40] [added: 55.75] | | | $ | [removed: 35.45] [added: 39.68] | |

| Fourth Quarter | | $ | [removed: 52.87] [added: 62.92] | | | $ | [removed: 47.01] [added: 53.83] | | | $ | [removed: 38.27] [added: 52.87] | | | $ | [removed: 32.28] [added: 47.01] | |

On June [removed: 10, 2016,] [added: 9, 2017,] the shareholders approved a dividend of $2.04 per share out of Garmin’s general reserves from capital contribution payable in four equal installments.

The Company paid the [removed: 2016] [added: 2017] dividends in accordance with the schedule above and expects to pay the March [removed: 31, 2017] [added: 30, 2018] dividend.

In addition, Garmin currently expects to pay a quarterly cash dividend in the remaining three quarters of [removed: 2017.][added: 2018.]

On June [removed: 5, 2015,] [added: 10, 2016,] the shareholders approved a dividend of $2.04 per share (of which [removed: $1.02] [added: $1.53] was paid in the Company’s [removed: 2015] [added: 2016] fiscal year) payable in four equal installments on dates determined by the Board of Directors.

| June 30, [removed: 2015] [added: 2017] | | June [removed: 16, 2015] [added: 19, 2017] | | $ | 0.51 | |

| September [removed: 30, 2015] [added: 29, 2017] | | September 15, [removed: 2015] [added: 2017] | | $ | 0.51 | |

| December [removed: 31, 2015] [added: 29, 2017] | | December 15, [removed: 2015] [added: 2017] | | $ | 0.51 | |

| March [removed: 31, 2016] [added: 30, 2018] | | March [removed: 16, 2016] [added: 15, 2018] | | $ | 0.51 | |

The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from [removed: 12/31/2011] [added: 12/31/2012] to [removed: 12/31/2016.][added: 12/31/2017.]

[removed: ][added: ]

The Company made no repurchases of shares during the 13-weeks ended December 30, 2017.

On December 30, 2017, the Company had approximately $0.8 million of shares remaining to repurchase under the share repurchase authorization.

On December 31, 2017, the share repurchase authorization expired with no additional shares having been repurchased.

| | 37 | |

| | | 12/12 | | | | 12/13 | | | | 12/14 | | | | 12/15 | | | | 12/16 | | | | 12/17 | | |

| Garmin Ltd. | | | 100.00 | | | | 118.71 | | | | 140.55 | | | | 103.91 | | | | 141.94 | | | | 181.09 | |

| Nasdaq Composite | | | 100.00 | | | | 141.63 | | | | 162.09 | | | | 173.33 | | | | 187.19 | | | | 242.29 | |

| Nasdaq 100 | | | 100.00 | | | | 142.44 | | | | 171.18 | | | | 191.91 | | | | 206.40 | | | | 276.50 | |

The share repurchase authorization expires on December 31, 2017.

| Period | | Total # of Shares Purchased | | | | Average Price Paid Per Share | | | | Maximum Number of Shares (or Approx. Dollar Value of Shares in thousands) That May Yet be Purchased Under the Plan | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Sept 25 - Oct 22, 2016 | | | 215,700 | | | $ | 48.34 | | | $ | 92,940 | |

| Oct 23 - Nov 19, 2016 | | | 189,377 | | | $ | 48.67 | | | $ | 83,722 | |

| Nov 20 - Dec 31, 2016 | | | 167,294 | | | $ | 50.02 | | | $ | 75,354 | |

| Total | | | 572,371 | | | $ | 48.94 | | | $ | 75,354 | |

| | 39 | |

| | | 12/11 | | | | 12/12 | | | | 12/13 | | | | 12/14 | | | | 12/15 | | | | 12/16 | | |

| Garmin Ltd. | | | 100.00 | | | | 106.74 | | | | 126.71 | | | | 150.02 | | | | 110.91 | | | | 151.50 | |

| NASDAQ Composite | | | 100.00 | | | | 116.41 | | | | 165.47 | | | | 188.69 | | | | 200.32 | | | | 216.54 | |

| NASDAQ 100 | | | 100.00 | | | | 119.87 | | | | 171.55 | | | | 205.70 | | | | 230.27 | | | | 245.74 | |

The selected consolidated balance sheet data as of December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015] [added: 31, 2016] and the selected consolidated statement of income data for the years ended December [added: 30, 2017, December] 31, 2016, [removed: December 26, 2015,] and December [removed: 27, 2014] [added: 26, 2015] were derived from the Company’s audited consolidated financial statements and the related notes thereto which are included in Item 8 of this annual report on Form 10-K.

The selected consolidated balance sheet data as of December [added: 26, 2015, December] 27, 2014, [removed: December 28, 2013,] and December [removed: 29, 2012] [added: 28, 2013] and the selected consolidated statement of income data for the years ended December [removed: 28, 2013] [added: 27, 2014] and December [removed: 29, 2012] [added: 28, 2013] were derived from the Company’s audited consolidated financial statements, not included herein.

| | | Dec. [added: 30, 2017 | | | | Dec.] 31, 2016 | | | | Dec. 26, 2015 | | | | Dec. 27, 2014 | | | | Dec. 28, 2013 | | | [removed: | Dec. 29, 2012 | | |]

| Net sales | | $ | [removed: 3,018,665] [added: 3,087,004] | | | $ | [removed: 2,820,270] [added: 3,018,665] | | | $ | [removed: 2,870,658] [added: 2,820,270] | | | $ | [removed: 2,631,851] [added: 2,870,658] | | | $ | [removed: 2,715,675] [added: 2,631,851] | |

| Cost of goods sold | | | [removed: 1,339,095] [added: 1,303,840] | | | | [removed: 1,281,566] [added: 1,339,095] | | | | [removed: 1,266,246] [added: 1,281,566] | | | | [removed: 1,224,551] [added: 1,266,246] | | | | [removed: 1,277,195] [added: 1,224,551] | |

| Gross profit | | | [removed: 1,679,570] [added: 1,783,164] | | | | [removed: 1,538,704] [added: 1,679,570] | | | | [removed: 1,604,412] [added: 1,538,704] | | | | [removed: 1,407,300] [added: 1,604,412] | | | | [removed: 1,438,480] [added: 1,407,300] | |

| Advertising expense | | | [removed: 177,143] [added: 164,693] | | | | [removed: 167,166] [added: 177,143] | | | | [removed: 146,633] [added: 167,166] | | | | [removed: 112,905] [added: 146,633] | | | | [removed: 138,757] [added: 112,905] | |

| Selling, general and administrative | | | [removed: 410,558] [added: 437,977] | | | | [removed: 394,914] [added: 410,558] | | | | [removed: 372,032] [added: 394,914] | | | | [removed: 355,440] [added: 372,032] | | | | [removed: 369,790] [added: 355,440] | |

| Research and development | | | [removed: 467,960] [added: 511,634] | | | | [removed: 427,043] [added: 467,960] | | | | [removed: 395,121] [added: 427,043] | | | | [removed: 364,923] [added: 395,121] | | | | [removed: 325,773] [added: 364,923] | |

| Total operating expenses | | | [removed: 1,055,661] [added: 1,114,304] | | | | [removed: 989,123] [added: 1,055,661] | | | | [removed: 913,786] [added: 989,123] | | | | [removed: 833,268] [added: 913,786] | | | | [removed: 834,320] [added: 833,268] | |

| Operating income | | | [removed: 623,909] [added: 668,860] | | | | [removed: 549,581] [added: 623,909] | | | | [removed: 690,626] [added: 549,581] | | | | [removed: 574,032] [added: 690,626] | | | | [removed: 604,160] [added: 574,032] | |

| Other income, net (2)(3) | | | [removed: 5,761] [added: 13,434] | | | | [removed: 17,606] [added: 5,761] | | | | [removed: 33,119] [added: 17,606] | | | | [removed: 79,526] [added: 33,119] | | | | [removed: 20,368] [added: 79,526] | |

| Income before income taxes | | | [removed: 629,670] [added: 682,294] | | | | [removed: 567,187] [added: 629,670] | | | | [removed: 723,745] [added: 567,187] | | | | [removed: 653,558] [added: 723,745] | | | | [removed: 624,528] [added: 653,558] | |

| Income tax [added: (benefit)] provision [removed: (4)(5)] [added: (4)] | | | [removed: 118,856] [added: (12,661] | [added: )] | | | [removed: 110,960] [added: 118,856] | | | | [removed: 359,534] [added: 110,960] | | | | [removed: 41,146] [added: 359,534] | | | | [removed: 82,125] [added: 41,146] | |

| Net income | | $ | [removed: 510,814] [added: 694,955] | | | $ | [removed: 456,227] [added: 510,814] | | | $ | [removed: 364,211] [added: 456,227] | | | $ | [removed: 612,412] [added: 364,211] | | | $ | [removed: 542,403] [added: 612,412] | |

| Basic | | $ | [removed: 2.71] [added: 3.70] | | | $ | [removed: 2.39] [added: 2.71] | | | $ | [removed: 1.89] [added: 2.39] | | | $ | [removed: 3.13] [added: 1.89] | | | $ | [removed: 2.78] [added: 3.13] | |

| Diluted | | $ | [removed: 2.70] [added: 3.68] | | | $ | [removed: 2.39] [added: 2.70] | | | $ | [removed: 1.88] [added: 2.39] | | | $ | [removed: 3.12] [added: 1.88] | | | $ | [removed: 2.76] [added: 3.12] | |

| Basic | | | [removed: 188,818] [added: 187,828] | | | | [removed: 190,631] [added: 188,818] | | | | [removed: 193,106] [added: 190,631] | | | | [removed: 195,411] [added: 193,106] | | | | [removed: 194,909] [added: 195,411] | |

| Diluted | | | [removed: 189,343] [added: 188,732] | | | | [removed: 191,107] [added: 189,343] | | | | [removed: 194,165] [added: 191,107] | | | | [removed: 196,341] [added: 194,165] | | | | [removed: 196,213] [added: 196,341] | |

| Dividends declared per share | | $ | 2.04 | | | $ | 2.04 | | | $ | [removed: 1.92] [added: 2.04] | | | $ | [removed: 1.80] [added: 1.92] | | | $ | 1.80 | |

| Cash and cash equivalents | | $ | [removed: 846,883] [added: 891,488] | | | $ | [removed: 833,070] [added: 846,883] | | | $ | [removed: 1,196,268] [added: 833,070] | | | $ | [removed: 1,179,149] [added: 1,196,268] | | | $ | [removed: 1,231,180] [added: 1,179,149] | |

| Marketable securities | | | [removed: 1,480,237] [added: 1,421,720] | | | | [removed: 1,558,548] [added: 1,480,237] | | | | [removed: 1,575,333] [added: 1,558,548] | | | | [removed: 1,651,968] [added: 1,575,333] | | | | [removed: 1,641,395] [added: 1,651,968] | |

| Total assets | | | [removed: 4,525,133] [added: 5,010,260] | | | | [removed: 4,499,391] [added: 4,525,133] | | | | [removed: 4,693,303] [added: 4,499,391] | | | | [removed: 4,879,603] [added: 4,693,303] | | | | [removed: 4,819,124] [added: 4,879,603] | |

| Total stockholders' equity | | | [removed: 3,418,003] [added: 3,802,466] | | | | [removed: 3,345,126] [added: 3,418,003] | | | | [removed: 3,403,367] [added: 3,345,126] | | | | [removed: 3,659,706] [added: 3,403,367] | | | | [removed: 3,531,796] [added: 3,659,706] | |

| | (3) | Includes [added: $22.6 million,] $31.7 million, $23.5 million, $4.3 million, and $20.0 million of foreign currency losses in [added: 2017,] 2016, 2015, [removed: 2014,] and [removed: 2012,] [added: 2014,] respectively, and $35.5 million of foreign currency gain in 2013. |

| | (4) | [added: 2017 – includes $180.0 million income tax benefit due to election to align Switzerland corproate tax positions partially offset by $22.6 million of income tax expense due to the expiration of certain share-based awards;] 2014 – includes [added: $307.6 million income tax expense associated with our inter-company restructuring partially offset by] $72.9 million income tax reserve release due to expiration of certain statutes of limitations or completion of tax audits [removed: partially offset by Swiss withholding tax expense due to the release of reserves;] 2013 [removed: -] [added: –] includes $68.7 million income tax reserve release due to expiration of certain statutes of limitations or completion of tax audits partially offset by Taiwan surtax expense due to the release of reserves |

| | 39 | |

| --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| | (5) | Includes a $307.6 million income tax expense in 2014 associated with our inter-company restructuring discussed within Item 7 - Discussion and Analysis of Financial Condition and Results of Operation - Comparison of the 52-weeks ended December, 26 2015 and December 27, 2014 |

| | 41 | |

Years Ended December [added: 30, 2017, December] 31, 2016, December 26, [removed: 2015, December 27, 2014][added: 2015]

| [Report of Ernst & Young LLP, Independent Registered Public Accounting [removed: Firm](#GAR_016)] [added: Firm](#fin_001)] | [removed: 60] [added: [58](#fin_001)] |

| [Consolidated Balance Sheets at December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015](#GAR_017)] [added: 31, 2016](#fin_002)] | [removed: 61] [added: [59](#fin_002)] |

| [Consolidated Statements of Income for the Years Ended December [added: 30, 2017, December] 31, 2016, [added: And] December 26, [removed: 2015, and December 27, 2014](#GAR_018)] [added: 2015](#fin_003)] | [removed: 62] [added: [60](#fin_003)] |

| [Consolidated Statements of Comprehensive Income for the Years Ended December [removed: 31, 2016,] [added: 30, 2017,] December [removed: 26, 2015] [added: 31, 2016] and December [removed: 27, 2014](#GAR_019)] [added: 26, 2015](#fin_004)] | [removed: 63] [added: [61](#fin_004)] |

| [Consolidated Statements of Stockholders’ Equity for the Years Ended December [added: 30, 2017, December] 31, 2016, [removed: December 26, 2015,] and December [removed: 27, 2014](#GAR_020)] [added: 26, 2015](#fin_005)] | [removed: 64] [added: [62](#fin_005)] |

| [Consolidated Statements of Cash Flows for the Years Ended December [added: 30, 2017, December] 31, 2016, [removed: December 26, 2015,] and December [removed: 27, 2014](#GAR_021)] [added: 26, 2015](#fin_006)] | [removed: 65] [added: [63](#fin_006)] |

| [Notes to Consolidated Financial [removed: Statements](#GAR_022)] [added: Statements](#fin_007)] | [removed: 67] [added: [65](#fin_007)] |

[removed: The] [added: To the Stockholders and the] Board of Directors [removed: and Shareholders] of Garmin Ltd. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Garmin Ltd. and Subsidiaries [added: (the Company)] as of December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015,] [added: 31, 2016,] and the related consolidated statements of income, comprehensive income, [removed: stockholders'] [added: stockholders’] equity and cash flows for each of the three years in the period ended December [removed: 31, 2016.][added: 30, 2017 and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”).]

Our responsibility is to express an opinion on [removed: these] [added: the Company’s] financial statements based on our audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material [removed: misstatement.][added: misstatement, whether due to error or fraud.]

[removed: An audit includes] [added: Such procedures included] examining, on a test basis, evidence [removed: supporting] [added: regarding] the amounts and disclosures in the financial statements.

[removed: An audit] [added: Our audits] also [removed: includes assessing] [added: included evaluating] the accounting principles used and significant estimates made by management, as well as evaluating the overall [added: presentation of the] financial [removed: statement presentation.][added: statements.]

In our opinion, the financial statements [removed: referred to above] present fairly, in all material respects, the consolidated financial position of [removed: Garmin Ltd. and Subsidiaries] [added: the Company] at December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015,] [added: 31, 2016,] and the consolidated results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended December [removed: 31, 2016,] [added: 30, 2017,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States), Garmin Ltd. and Subsidiaries'] [added: States) (PCAOB), the Company’s] internal control over financial reporting as of December [removed: 31, 2016,] [added: 30, 2017,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February [removed: 22, 2017] [added: 21, 2018,] expressed an unqualified opinion thereon.

| | | December [removed: 31,] [added: 30,] | | | | December [removed: 26,] [added: 31,] | | |

| | | [added: 2017 | | | |] 2016 | | | | 2015 | | |

| Cash and cash equivalents [added: at beginning of year] | | [removed: $] | 846,883 | | | [removed: $] | 833,070 | | [added: | | 1,196,268 | |]

| Marketable securities _(Note 3)_ | | | [removed: 266,952] [added: 161,687] | | | | [removed: 215,161] [added: 266,952] | |

| Accounts receivable, less allowance for doubtful accounts of [removed: $14,669] [added: $4,168] in [removed: 2016] [added: 2017] and [removed: $13,805] [added: $14,669] in [removed: 2015] [added: 2016] | | | [removed: 527,062] [added: 590,882] | | | | [removed: 531,481] [added: 527,062] | |

| Inventories, net | | | [removed: 484,821] [added: 517,644] | | | | [removed: 500,554] [added: 484,821] | |

| Deferred costs | | | [removed: 47,395] [added: 48,312] | | | | [removed: 49,176] [added: 47,395] | |

| Prepaid expenses and other current assets | | | [removed: 89,903] [added: 153,912] | | | | [removed: 81,645] [added: 89,903] | |

| Total current assets | | | [removed: 2,263,016] [added: 2,363,925] | | | | [removed: 2,211,087] [added: 2,263,016] | |

| Land and improvements | | | [removed: 104,740] [added: 114,701] | | | | [removed: 85,162] [added: 104,740] | |

| Building and improvements | | | [removed: 376,916] [added: 482,794] | | | | [removed: 351,778] [added: 376,916] | |

| Office furniture and equipment | | | [removed: 222,439] [added: 246,107] | | | | [removed: 206,025] [added: 222,439] | |

| Manufacturing equipment | | | [removed: 129,526] [added: 156,119] | | | | [removed: 131,055] [added: 129,526] | |

| Engineering equipment | | | [removed: 124,979] [added: 141,321] | | | | [removed: 113,690] [added: 124,979] | |

| Vehicles | | | [removed: 21,259] [added: 21,115] | | | | [removed: 20,939] [added: 21,259] | |

| Accumulated depreciation | | | [removed: (496,981] [added: (566,473] | ) | | | [removed: (462,560] [added: (496,981] | ) |

| Restricted cash _(Note 4)_ | | | [removed: 113] [added: 271] | | | | [removed: 259] [added: 113] | |

| Marketable securities _(Note 3)_ | | | [removed: 1,213,285] [added: 1,260,033] | | | | [removed: 1,343,387] [added: 1,213,285] | |

| [removed: Noncurrent deferred] [added: Deferred] income [removed: tax] [added: taxes] _(Note 6)_ | | | [removed: 110,293] [added: 199,343] | | | | [removed: 116,518] [added: 110,293] | |

| Noncurrent deferred costs | | | [removed: 56,151] [added: 73,851] | | | | [removed: 38,769] [added: 56,151] | |

| Intangible assets, net | | | [removed: 305,002] [added: 409,801] | | | | [removed: 245,552] [added: 305,002] | |

| Other assets | | | [removed: 94,395] [added: 107,352] | | | | [removed: 97,730] [added: 94,395] | |

| Total assets | | $ | [removed: 4,525,133] [added: 5,010,260] | | | $ | [removed: 4,499,391] [added: 4,525,133] | |

| | 57 | |

Opinion on the Financial Statements

Basis for Opinion

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud and performing procedures that respond to those risks.

We have served as the Company’s auditor since 1990.

February 21, 2018

| | 58 | |

| | | 2017 | | | | 2016 | | |

| | | | 1,162,157 | | | | 979,859 | |

| | | | 595,684 | | | | 482,878 | |

| Noncurrent income taxes | | | 138,295 | | | | 121,174 | |

| Noncurrent deferred revenue | | | 163,840 | | | | 140,407 | |

| Net income | | $ | 694,955 | | | $ | 510,814 | | | $ | 456,227 | |

| Net income | | | – | | | | – | | | | – | | | | 694,955 | | | | – | | | | 694,955 | |

| Comprehensive income | | | | | | | | | | | | | | | | | | | | | | | 787,761 | |

| Dividends declared | | | – | | | | – | | | | – | | | | (382,783 | ) | | | – | | | | (382,783 | ) |

| Balance at December 30, 2017 | | $ | 17,979 | | | $ | 1,828,386 | | | $ | (468,818 | ) | | $ | 2,368,874 | | | $ | 56,045 | | | $ | 3,802,466 | |

| | | 2017 | | | | 2016 | | | | 2015 | | |

| Net income | | $ | 694,955 | | | $ | 510,814 | | | $ | 456,227 | |

| | | 2017 | | | | 2016 | | | | 2015 | | |

| Increase in accrued capital expenditures related to purchases of property and equipment | | $ | 13,864 | | | $ | 2,154 | | | $ | \- | |

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.

| Raw materials | | $ | 179,659 | | | $ | 152,497 | |

| Work-in-process | | | 75,754 | | | | 61,048 | |

| Finished goods | | | 262,231 | | | | 271,276 | |

| Inventory | | $ | 517,644 | | | $ | 484,821 | |

| | (1) | Inventory balances by major class of inventory as of December 31, 2016 have been recast to conform to the current year presentation. |

ASC Topic 350 allows management to first perform a qualitative assessment (“step zero”) by assessing the qualitative factors of relevant events and circumstances at the reporting unit level to determine if it is necessary to perform the quantitative goodwill impairment test (“step one”).

If factors indicate that it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then the step one assessment will be performed.

If the fair value of the reporting unit is less than the carrying amount in step one then goodwill impairment will be recognized and the charge is determined through the “step two” analysis.

Considering these qualitative factors, management performed a step one quantitative goodwill impairment assessment of the auto PND reporting unit in the fourth quarter of 2017.

Management concluded that no other reporting units are currently at risk of impairment.

The Company did not recognize any material goodwill or intangible asset impairment charges in 2017, 2016, or 2015.

| June 30, 2017 | | June 19, 2017 | | $ | 0.51 | |

| September 29, 2017 | | September 15, 2017 | | $ | 0.51 | |

| December 29, 2017 | | December 15, 2017 | | $ | 0.51 | |

| March 30, 2018 | | March 15, 2018 | | $ | 0.51 | |

| | | December 30, | | | | December 31, | | | | December 26, | | |

| | | 2017 | | | | 2016 | | | | 2015 | | |

| --- | --- |

| --- | --- | --- |

February 22, 2017

| | | | | | | | | |

| | | | 979,859 | | | | 908,649 | |

| | | | 482,878 | | | | 446,089 | |

| Non-current income taxes | | | 121,174 | | | | 101,689 | |

| Shares, CHF 10.00 par value, 208,077 shares authorized and issued; 189,722 shares outstanding at December 26, 2015; _(Notes 9, 10, and 11):_ | | | 17,979 | | | | 1,797,435 | |

| Balance at December 28, 2013 | | $ | 1,797,435 | | | $ | 79,263 | | | ($ | 120,620 | ) | | $ | 1,865,587 | | | $ | 38,041 | | | $ | 3,659,706 | |

| Net income | | | – | | | | – | | | | – | | | | 364,211 | | | | – | | | | 364,211 | |

| Comprehensive income | | | | | | | | | | | | | | | | | | | | | | | 328,741 | |

| Dividends declared | | | – | | | | – | | | | – | | | | (369,826 | ) | | | – | | | | (369,826 | ) |

| Proceeds from repayment of loan receivable | | | \- | | | | \- | | | | 137,379 | |

| Tax benefit from issuance of equity awards | | | 1,692 | | | | (2,049 | ) | | | (84 | ) |

| Cash and cash equivalents at beginning of year | | | 833,070 | | | | 1,196,268 | | | | 1,179,149 | |

| Cash paid during the year for interest | | | \- | | | | \- | | | | \- | |

Loan Receivable

On March 14, 2013, the Company entered into a Memorandum of Agreement (the “Agreement”) with Bombardier, Inc. (“Bombardier”).

The Company is the supplier of the avionics system for the Lear 70 and Lear 75 aircraft for Learjet, Inc., which is a subsidiary of Bombardier (the “Program”).

In order to assist Bombardier in connection with delayed cash flows from the Program partially related to the certification of avionics for the Program exceeding the planned delivery date, the Company agreed to provide Bombardier a short term, interest free, loan of $173,708 in cash in seven installments beginning on March 22, 2013 and ending on September 20, 2013 pursuant to the terms and conditions of the Agreement.

Bombardier repaid the loan in five installments beginning in November 2013 and ending in April 2014 pursuant to the terms and conditions of the Agreement and subsequent amendment signed December 6, 2013.

| Raw Materials | | $ | 162,882 | | | $ | 203,173 | |

| Work-in-process | | | 68,602 | | | | 69,690 | |

| Finished goods | | | 293,789 | | | | 273,762 | |

| Inventory Reserves | | | (40,452 | ) | | | (46,071 | ) |

| Inventory, net of reserves | | $ | 484,821 | | | $ | 500,554 | |

The Company did not recognize any material goodwill or intangible asset impairment charges in 2016, 2015, or 2014, and step two was not considered necessary in any of those periods as fair value was substantially in excess of the carrying amount for all reporting units in the respective periods.

| June 30, 2014 | | June 17, 2014 | | $ | 0.48 | |

| September 30, 2014 | | September 15, 2014 | | $ | 0.48 | |

| December 31, 2014 | | December 15, 2014 | | $ | 0.48 | |

| March 31, 2015 | | March 16, 2015 | | $ | 0.48 | |

ASU 2014-09 requires that a company will recognize revenue at an amount that reflects the consideration to which the company expects to be entitled in exchange for transferring goods or services to a customer.

The new standard may be applied retrospectively to each prior period presented or in a modified retrospective approach in which the cumulative effect will be recognized as of the date of adoption.

Additional updates to Topic 606 issued by the FASB in 2015 and 2016 include the following:

| | · | ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”), which defers the effective date of the new guidance such that the new provisions will now be required for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company does not intend to early adopt, and adoption will therefore occur in the fiscal year ending December 28, 2018. |

| | · | ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerations (reporting revenue gross versus net). |

| | · | ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”), which clarifies the implementation guidance on identifying performance obligations and classifying licensing arrangements |

| | · | ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), which clarifies the implementation guidance in a number of other areas. |

| | · | ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20”), which affects narrow aspects of Topic 606 such as providing incremental guidance around contract costs. |

We currently anticipate we will adopt the new revenue standards using the full retrospective method to restate each prior reporting period presented.

[removed: Management’s] [added: The Company’s management is responsible for maintaining effective internal control over financial reporting and for its] assessment of [removed: and conclusion on] the effectiveness of internal control over financial reporting [removed: are] included [removed: as Exhibits 31.1, 31.2, 32.1 and 32.2.][added: in the accompanying Management’s Report on Internal Control over Financial Reporting.]

Management of the Company assessed the effectiveness of the Company’s internal control over financial reporting as of December [removed: 31, 2016.][added: 30, 2017.]

Based on such assessment and those criteria, management believes that the Company maintained effective internal control over financial reporting as of December [removed: 31, 2016.][added: 30, 2017.]

Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements, issued an attestation report on management’s effectiveness of the Company’s internal control over financial reporting as of December [removed: 31, 2016,] [added: 30, 2017,] as stated in their report which is included herein.

[removed: _(c)_ _Attestation] [added: _(c) Attestation] Report of the Independent Registered Public Accounting Firm_

[removed: The] [added: To the Stockholders and the] Board of Directors [removed: and Shareholders] of Garmin Ltd. and Subsidiaries

We have audited Garmin Ltd. and Subsidiaries’ internal control over financial reporting as of December [removed: 31, 2016,] [added: 30, 2017,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 [removed: framework)] [added: framework),] (the COSO criteria).

We conducted our audit in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

In our opinion, Garmin Ltd. and Subsidiaries [added: (the Company)] maintained, in all material respects, effective internal control over financial reporting as of December [removed: 31, 2016,] [added: 30, 2017,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Garmin Ltd. and Subsidiaries as of December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015,] [added: 31, 2016,] and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December [removed: 31, 2016 of Garmin Ltd.] [added: 30, 2017,] and [removed: Subsidiaries] [added: the related notes] and [added: financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”) of the Company and] our report dated February [removed: 22, 2017] [added: 21, 2018] expressed an unqualified opinion thereon.

There were no changes in our internal control over financial reporting during the quarter ended December [removed: 31, 2016] [added: 30, 2017] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

| | 92 | |

Opinion on Internal Control over Financial Reporting

Basis for Opinion

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Definition and Limitations of Internal Control Over Financial Reporting

February 21, 2018

Garmin Ltd. and Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.

February 22, 2017

| | 94 | |

| | 94 | |

| | 95 | |

Garmin’s definitive proxy statement in connection with its annual meeting of shareholders scheduled for June [removed: 9, 2017] [added: 8, 2018] (the “Proxy Statement”) will be filed with the Securities and Exchange Commission no later than 120 days after December [removed: 31, 2016.][added: 30, 2017.]

[removed: (a) Directors] [added: | | (a) | Directors] of the Company [added: |]

The information set forth in response to Item 401 of Regulation S-K under the headings “Proposal [removed: 5] [added: 6] – Re-election of [removed: Directors”] [added: five directors and election of one new director”] in the Proxy Statement is hereby incorporated herein by reference in partial response to this Item 10.

The information set forth in response to Item 402 of Regulation S-K under the heading “Board Meetings and Standing Committee [removed: Meetings—] [added: Meetings -] Audit Committee” in the Proxy Statement is hereby incorporated herein by reference in partial response to this Item 10.

A copy of the Code is available on Garmin’s website at: [removed: http://www8.garmin.com/aboutGarmin/invRelations/documents/Code_of_Conduct.pdf.][added: http://www8.garmin.com/aboutGarmin/invRelations/documents/Code_of_Conduct_2016.pdf.]

If any amendments to the Code are made, or any waivers with respect to the Code are granted to the President and Chief Executive Officer, the Chief Financial Officer or Controller, or any person performing a similar function, such amendment or waiver will be disclosed on Garmin’s website at: [removed: http://www8.garmin.com/aboutGarmin/invRelations/documents/Code_of_Conduct.pdf.][added: http://www8.garmin.com/aboutGarmin/invRelations/documents/Code_of_Conduct_2016.pdf.]

| | 95 | |

| --- | --- | --- |

| | 96 | |

The information set forth in response to Item 402 of Regulation S-K under the headings “Executive Compensation Matters” and “Proposal [removed: 5-Re-election] [added: 6 - Re-election] of [removed: Directors-] [added: five directors and election of one new director -] Non-Management Director Compensation” in the Proxy Statement is hereby incorporated herein by reference in partial response to this Item 11.

The information set forth in response to Item 407(e)(4) of Regulation S-K under the heading “Proposal [removed: 5-Re-election] [added: 6 -Re-election] of [removed: Directors —] [added: five directors and election of one new director -] Compensation Committee Interlocks and Insider Participation; Certain Relationships” in the Proxy Statement is hereby incorporated herein by reference in partial response to this Item 11.

The information set forth in response to Item 407(e)(5) of Regulation S-K under the heading “Executive Compensation Matters [removed: –Compensation] [added: – Compensation] Committee Report” in the Proxy Statement is hereby incorporated herein by reference in partial response to this Item 11.

The following table gives information as of December [removed: 31, 2016] [added: 30, 2017] about the Garmin common shares that may be issued under all of the Company’s existing equity compensation plans, as adjusted for stock splits.

| [removed: Plan Category] [added: Plan Category] | | warrants and rights | | | | warrants and rights | | | | column A) | | |

| Equity compensation plans approved by shareholders | | | 2,454,078 | | | $ | 48.94 | | | | 7,048,314 | |

| Total | | | 2,454,078 | | | $ | 48.94 | | | | 7,048,314 | |

| | 96 | |

| Equity compensation plans approved by shareholders | | | 4,560,911 | | | $ | 74.48 | | | | 6,254,383 | |

| Total | | | 4,560,911 | | | $ | 74.48 | | | | 6,254,383 | |

| | 97 | |

The information set forth in response to Item 404 of Regulation S-K under the heading “Proposal [removed: 5-Re-election] [added: 6 – Re-election] of [removed: Directors —] [added: five directors and election of one new director -] Compensation Committee Interlocks and Insider Participation; Certain Relationships” in the Proxy Statement is incorporated herein by reference in partial response to this Item 13.

The information set forth in response to Item 407(a) of Regulation S-K under the headings “Proposal [removed: 5] [added: 6] – Re-election of [removed: Directors”] [added: five directors and election of one new director”] in the Proxy Statement is hereby incorporated herein by reference in partial response to this Item 13.

| | 97 | |

| | 98 | |

[removed: | | |] All other schedules have been omitted because they are not applicable, are insignificant or the required information is shown in the consolidated financial statements or notes thereto. [removed: |]

| [added: |] EXHIBIT | | |

| [added: |] NUMBER | | DESCRIPTION |

| [removed: 3.1] | [added: [3.1](http://www.sec.gov/Archives/edgar/data/1121788/000161577416007773/s104335_ex3-1.htm)] | [removed: Articles] [added: | [Articles] of Association of Garmin Ltd., as amended and restated on June 10, 2016 (incorporated by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q filed on October 26, [removed: 2016).] [added: 2016).](http://www.sec.gov/Archives/edgar/data/1121788/000161577416007773/s104335_ex3-1.htm)] |

| [removed: 3.2] | [added: [3.2](http://www.sec.gov/Archives/edgar/data/1121788/000114420414010483/v367065_ex3-2.htm)] | [removed: Organizational] [added: | [Organizational] Regulations of Garmin Ltd., as amended on February 14, 2014 (incorporated by reference to Exhibit 3.2 of the Registrant’s Annual Report on Form 10-K filed on February 19, [removed: 2014).] [added: 2014).](http://www.sec.gov/Archives/edgar/data/1121788/000114420414010483/v367065_ex3-2.htm)] |

| [removed: 10.1] | [added: [10.1](http://www.sec.gov/Archives/edgar/data/1121788/000095013100006642/0000950131-00-006642-0005.txt)] | [removed: Garmin] [added: | [Garmin] Ltd. 2000 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form S-1 filed December 6, 2000 (Commission File No. [removed: 333-45514)).] [added: 333-45514)).](http://www.sec.gov/Archives/edgar/data/1121788/000095013100006642/0000950131-00-006642-0005.txt)] |

| [removed: 10.2] | [added: [10.2](http://www.sec.gov/Archives/edgar/data/1121788/000112178804000033/form8k_exhibit10-1.htm)] | [removed: Form] [added: | [Form] of Stock Option Agreement pursuant to the Garmin Ltd. 2000 Equity Incentive Plan for Employees of Garmin International, Inc. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed on September 7, [removed: 2004).] [added: 2004).](http://www.sec.gov/Archives/edgar/data/1121788/000112178804000033/form8k_exhibit10-1.htm)] |

| [removed: 10.3] | [added: [10.3](http://www.sec.gov/Archives/edgar/data/1121788/000112178804000033/form8k_exhibit10-3.htm)] | [removed: Form] [added: | [Form] of Stock Option Agreement pursuant to the Garmin Ltd. 2000 Equity Incentive Plan for Employees of Garmin Corporation (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed on September 7, [removed: 2004).] [added: 2004).](http://www.sec.gov/Archives/edgar/data/1121788/000112178804000033/form8k_exhibit10-3.htm)] |