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

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

The information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included in this Form 10-Q and the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Unless the context otherwise requires, references in this document to "we", "us", "our" and similar terms refer to Garmin Ltd. and its subsidiaries.

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

Company Overview

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

Business Environment Update

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

Results of Operations

As indicated in Note 1 to the condensed consolidated financial statements, the Company announced an organization realignment in January 2023, which combined the consumer auto operating segment with the outdoor operating segment. As a result, the Company’s operating segments, which also represent our reportable segments, are fitness, outdoor, aviation, marine, and auto OEM. Results for the 13-week and 39-week periods ended September 24, 2022 have been recast below to conform with the current period presentation. This change had no effect on the Company’s consolidated results of operations.

Comparison of 13-Weeks Ended September 30, 2023 and September 24, 2022

Net Sales

Net Sales		13-Weeks Ended September 30, 2023				Year-over-Year Change				13-Weeks Ended September 24, 2022
Fitness		$	352,976				26	%		$	279,875
Percentage of Total Net Sales			27	%							25	%
Outdoor			433,997				7	%			406,832
Percentage of Total Net Sales			34	%							36	%
Aviation			198,160				5	%			188,043
Percentage of Total Net Sales			16	%							16	%
Marine			182,248				(7	%)			196,506
Percentage of Total Net Sales			14	%							17	%
Auto OEM			110,150				59	%			69,178
Percentage of Total Net Sales			9	%							6	%
Total		$	1,277,531				12	%		$	1,140,434

Net sales increased 12% for the 13-week period ended September 30, 2023 when compared to the year-ago quarter. Total unit sales in the third quarter of 2023 increased to 3,997 when compared to total unit sales of 3,491 in the third quarter of 2022, which differs from the percent increase in revenue primarily due to shifts in segment and product mix. Outdoor was the largest portion of our revenue mix at 34% in the third quarter of 2023 compared to 36% in the third quarter of 2022.

The increase in fitness revenue was driven by sales growth across all categories, led by strong demand for wearables. Outdoor revenue increased primarily due to growth in adventure watches. Aviation revenue increased due to growth in OEM product categories. Auto OEM revenue increased primarily due to increased shipments of domain controllers. The decrease in marine revenue was due to declines across multiple categories, partially offset by contributions from newly acquired JL Audio.

Gross Profit

Gross Profit		13-Weeks Ended September 30, 2023				Year-over-Year Change				13-Weeks Ended September 24, 2022
Fitness		$	190,685				29	%		$	147,716
Percentage of Segment Net Sales			54	%							53	%
Outdoor			270,774				8	%			250,412
Percentage of Segment Net Sales			62	%							62	%
Aviation			148,364				8	%			137,732
Percentage of Segment Net Sales			75	%							73	%
Marine			95,186				(14	%)			110,747
Percentage of Segment Net Sales			52	%							56	%
Auto OEM			23,560				(1	%)			23,892
Percentage of Segment Net Sales			21	%							35	%
Total		$	728,569				9	%		$	670,499
Percentage of Total Net Sales			57	%							59	%

Gross profit dollars in the third quarter of 2023 increased 9%, primarily due to the increase in net sales when compared to the year-ago quarter, as described above. Consolidated gross margin decreased 180 basis points when compared to the year-ago quarter primarily due to segment mix and partially due to product mix within certain segments.

The fitness gross margin increase of 120 basis points was primarily attributable to favorable freight costs. The aviation gross margin increase of 160 basis points was primarily attributable to product mix. The outdoor gross margin was relatively flat when compared to the year-ago quarter. The marine and auto OEM gross margin decreases of 410 and 1,320 basis points, respectively, were primarily attributable to unfavorable product mix.

Operating Expense

Operating Expense		13-Weeks Ended September 30, 2023				Year-over-Year Change				13-Weeks Ended September 24, 2022
Advertising expense		$	35,158				7	%		$	32,888
Percentage of Total Net Sales			3	%							3	%
Selling, General and administrative expenses			201,470				6	%			189,546
Percentage of Total Net Sales			16	%							17	%
Research and development expense			221,572				6	%			208,692
Percentage of Total Net Sales			17	%							18	%
Total		$	458,200				6	%		$	431,126
Percentage of Total Net Sales			36	%							38	%

Total operating expense increased 6% in absolute dollars and decreased 190 basis points as a percent of revenue when compared to the year-ago quarter.

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

Selling, general and administrative expense increased 6% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago quarter. The absolute dollar expense increase in the third quarter of 2023 was primarily attributable to increased personnel-related expenses and information technology costs.

Research and development expense increased 6% in absolute dollars and decreased 100 basis points as a percent of revenue when compared to the year-ago quarter. The absolute dollar expense increase was primarily due to higher engineering personnel costs.

Operating Income

Operating Income (Loss)		13-Weeks Ended September 30, 2023				Year-over-Year Change				13-Weeks Ended September 24, 2022
Fitness		$	74,614				83	%		$	40,850
Percentage of Segment Net Sales			21	%							15	%
Outdoor			136,401				11	%			122,947
Percentage of Segment Net Sales			31	%							30	%
Aviation			49,269				2	%			48,487
Percentage of Segment Net Sales			25	%							26	%
Marine			23,850				(47	%)			44,950
Percentage of Segment Net Sales			13	%							23	%
Auto OEM			(13,765	)			(23	%)			(17,861	)
Percentage of Segment Net Sales			(12	%)							(26	%)
Total		$	270,369				13	%		$	239,373
Percentage of Total Net Sales			21	%							21	%

Total operating income increased 13% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago quarter. The increase in operating income was primarily driven by the increase in sales, as described above. The improved performance in fitness, outdoor, aviation, and auto OEM was partially offset by a decrease in marine.

Other Income (Expense)

Other Income (Expense)		13-Weeks Ended September 30, 2023				13-Weeks Ended September 24, 2022
Interest income		$	19,803			$	10,472
Foreign currency gains (losses)			(11,539	)			(29,863	)
Other income			938				285
Total		$	9,202			$	(19,106	)

The average interest return on cash and investments during the third quarter of 2023 was 2.8%, compared to 1.5% during the same quarter of 2022.

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

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

The $29.9 million currency loss recognized in the third quarter of 2022 was primarily due to the U.S. Dollar strengthening against the Polish Zloty, Euro, Australian Dollar, British Pound Sterling, Chinese Yuan, and Japanese Yen, partially offset by the U.S. Dollar strengthening against the Taiwan Dollar, within the 13-week period ended September 24, 2022. During this period, the U.S. Dollar strengthened 8.8% against the Polish Zloty, 8.2% against the Euro, 5.3% against the Australian Dollar, 11.5% against the British Pound Sterling, 5.4% against the Chinese Yuan, and 5.7% against the Japanese Yen resulting in losses of $15.4 million, $12.2 million, $5.0 million, $4.3 million, $3.3 million, and $1.9 million, respectively, partially offset by the U.S. Dollar strengthening 6.6% against the Taiwan Dollar, resulting in a gain of $17.1 million. The remaining net currency loss of $4.9 million was related to the impacts of other currencies, each of which was individually immaterial.

Income Tax Provision

The Company recorded income tax expense of $22.3 million in the 13-week period ended September 30, 2023, compared to income tax expense of $9.4 million in the 13-week period ended September 24, 2022. The effective tax rate was 8.0% in the third quarter of 2023, compared to 4.3% in the third quarter of 2022. The increase was primarily due to a change in income mix by jurisdiction and a revaluation of U.S. state deferred tax assets in the third quarter of 2023, compared to the third quarter of 2022.

Net Income

As a result of the above, net income for the 13-week period ended September 30, 2023 was $257.2 million compared to $210.8 million for the 13-week period ended September 24, 2022, an increase of $46.4 million.

Comparison of 39-Weeks Ended September 30, 2023 and September 24, 2022

Net Sales

Net Sales		39-Weeks Ended September 30, 2023				Year-over-Year Change				39-Weeks Ended September 24, 2022
Fitness		$	932,561				21	%		$	772,867
Percentage of Total Net Sales			25	%							22	%
Outdoor			1,210,773				(8	%)			1,318,810
Percentage of Total Net Sales			32	%							37	%
Aviation			629,195				11	%			567,548
Percentage of Total Net Sales			17	%							16	%
Marine			677,026				(2	%)			693,369
Percentage of Total Net Sales			18	%							19	%
Auto OEM			296,196				47	%			201,337
Percentage of Total Net Sales			8	%							6	%
Total		$	3,745,751				5	%		$	3,553,931

Net sales increased 5% for the 39-week period ended September 30, 2023 when compared to the year-ago period. Total unit sales in the first three quarters of 2023 increased to 11,369 when compared to total unit sales of 10,672 in the first three quarters of 2022. Outdoor was the largest portion of our revenue mix at 32% in the first three quarters of 2023 compared to 37% in the first three quarters of 2022.

The increase in fitness revenue was primarily driven by strong demand for wearables. Aviation revenue increased primarily due to growth in OEM product categories. Auto OEM revenue increased primarily due to increased shipments of domain controllers. Outdoor revenue decreased primarily due to declines in adventure watches during the first quarter of 2023. Marine revenue decreased due to declines across multiple categories, partially offset by contributions from newly acquired JL Audio.

Gross Profit

Gross Profit		39-Weeks Ended September 30, 2023				Year-over-Year Change				39-Weeks Ended September 24, 2022
Fitness		$	484,759				25	%		$	387,921
Percentage of Segment Net Sales			52	%							50	%
Outdoor			755,800				(8	%)			819,376
Percentage of Segment Net Sales			62	%							62	%
Aviation			463,774				12	%			413,206
Percentage of Segment Net Sales			74	%							73	%
Marine			365,162				(3	%)			376,734
Percentage of Segment Net Sales			54	%							54	%
Auto OEM			71,311				10	%			64,568
Percentage of Segment Net Sales			24	%							32	%
Total		$	2,140,806				4	%		$	2,061,805
Percentage of Total Net Sales			57	%							58	%

Gross profit dollars in the first three quarters of 2023 increased 4%, primarily due to the increase in net sales when compared to the year-ago period, as described above. Consolidated gross margin was relatively flat when compared to the year-ago period.

The fitness gross margin increase of 180 basis points was primarily attributable to favorable freight costs. The outdoor, aviation, and marine gross margins were relatively flat when compared to the year-ago period. The auto OEM gross margin decrease of 800 basis points was primarily attributable to unfavorable product mix.

Operating Expense

Operating Expense		39-Weeks Ended September 30, 2023				Year-over-Year Change				39-Weeks Ended September 24, 2022
Advertising expense		$	111,849				1	%		$	110,378
Percentage of Total Net Sales			3	%							3	%
Selling, General and administrative expenses			609,800				7	%			571,541
Percentage of Total Net Sales			16	%							16	%
Research and development expense			667,451				8	%			619,215
Percentage of Total Net Sales			18	%							17	%
Total		$	1,389,100				7	%		$	1,301,134
Percentage of Total Net Sales			37	%							37	%

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

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

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

Research and development expense increased 8% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago period. The absolute dollar expense increase was primarily due to higher engineering personnel costs.

Operating Income

Operating Income (Loss)		39-Weeks Ended September 30, 2023				Year-over-Year Change				39-Weeks Ended September 24, 2022
Fitness		$	139,651				115	%		$	64,894
Percentage of Segment Net Sales			15	%							8	%
Outdoor			351,399				(20	%)			439,129
Percentage of Segment Net Sales			29	%							33	%
Aviation			169,730				13	%			150,359
Percentage of Segment Net Sales			27	%							26	%
Marine			142,135				(18	%)			172,451
Percentage of Segment Net Sales			21	%							25	%
Auto OEM			(51,209	)			(23	%)			(66,162	)
Percentage of Segment Net Sales			(17	%)							(33	%)
Total		$	751,706				(1	%)		$	760,671
Percentage of Total Net Sales			20	%							21	%

Total operating income decreased 1% in absolute dollars and 130 basis points as a percent of revenue when compared to the year-ago period. The decrease as a percent of revenue was primarily due to higher operating expenses, partially offset by sales growth, as described above. The decrease in outdoor and marine operating income was partially offset by improved performance in fitness, aviation, and auto OEM.

Other Income (Expense)

Other Income (Expense)		39-Weeks Ended September 30, 2023				39-Weeks Ended September 24, 2022
Interest income		$	54,461			$	26,520
Foreign currency gains (losses)			6,946				(55,809	)
Other Income			4,206				3,716
Total		$	65,613			$	(25,573	)

The average interest returns on cash and investments during the 39-week periods ended September 30, 2023 and September 24, 2022 were 2.6% and 1.2%, respectively.

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

The $6.9 million currency gain recognized in the 39-week period ended September 30, 2023 was primarily due to the U.S. Dollar strengthening against the Taiwan Dollar, partially offset by the U.S. Dollar strengthening against the Australian Dollar, Chinese Yuan, and Japanese Yen and U.S. Dollar volatility with the Polish Zloty within the 39-week period ended September 30, 2023. During this period, the U.S. Dollar strengthened 4.9% against the Taiwan Dollar, resulting in a gain of $21.1 million, partially offset by the U.S. Dollar strengthening 5.2% against the Australian Dollar, 4.6% against the Chinese Yuan, and 12.2% against the Japanese Yen, resulting in losses of $2.9 million, $2.9 million, and $2.8 million, respectively, while volatility with the Polish Zloty resulted in a net loss of $4.5 million as the loss in the third quarter more than offset gains in previous quarters. The remaining net currency loss of $1.1 million was related to the impacts of other currencies, each of which was individually immaterial.

The $55.8 million currency loss recognized in the 39-week period ended September 24, 2022 was primarily due to the U.S. Dollar strengthening against the Polish Zloty, Euro, Australian Dollar, British Pound Sterling, Chinese Yuan, and Japanese Yen, partially offset by the U.S. Dollar strengthening against the Taiwan Dollar, within the 39-week period ended September 24, 2022. During this period, the U.S. Dollar strengthened 16.7% against the Polish Zloty, 14.4% against the Euro, 9.9% against the Australian Dollar, 18.9% against the British Pound Sterling, 10.0% against the Chinese Yuan, and 20.2% against the Japanese Yen resulting in losses of $26.7 million, $21.1 million, $11.7 million, $6.8 million, $6.2 million, and $5.7 million, respectively, partially offset by the U.S. Dollar strengthening 12.9% against the Taiwan Dollar, resulting in a gain of $34.2 million. The remaining net currency loss of $11.8 million was related to the impacts of other currencies, each of which was individually immaterial.

Income Tax Provision

The Company recorded income tax expense of $69.8 million in the first three quarters of 2023, compared to income tax expense of $54.8 million in the first three quarters of 2022. The effective tax rate was 8.5% in the first three quarters of 2023 compared to 7.5% in the first three quarters of 2022. The increase was primarily due to a decrease in U.S. tax deductions in the first three quarters of 2023 compared to the first three quarters of 2022.

Global taxing standards continue to evolve as a result of the Organization for Economic Co-Operation and Development (OECD) recommendations aimed at preventing perceived base erosion and profit shifting (BEPS) by multinational corporations. While these recommendations do not change tax law, the countries where we operate may implement legislation or take unilateral actions which may result in adverse effects to our income tax provision and financial statements.

Partially to respond to changes to global tax standards, we initiated an intercompany transaction in 2020 which migrates ownership of certain intellectual property from Switzerland to the United States, which is the primary location of research, development, and executive management. At the end of this migration, a higher percentage of income will be recognized in the U.S. Due to the subjectivity inherent in transfer pricing associated with this intercompany transaction, we are pursuing an advanced pricing agreement with relevant jurisdictions to provide certainty regarding the pricing. We are unable to predict the outcome of the final advanced pricing agreement, related negotiations, and associated impacts for periods during negotiation, upon finalization, and in the periods that follow.

In 2021, the OECD continued work on the BEPS project by issuing a statement regarding a two-pillar solution which includes within “Pillar Two” a global minimum tax. Numerous countries have signed onto the OECD statement including Switzerland, the U.S., and the U.K. Recently, Switzerland’s Federal Council proposed legislation which would implement a federal minimum tax in Switzerland of 15% in 2024. Additionally, the Parliament of the Swiss canton of Schaffhausen has also passed legislation, subject to a public-vote approval, that would increase the cantonal corporate tax rate beginning in 2024 and result in a combined federal and cantonal statutory tax rate of approximately 15% in Switzerland. Neither the OECD statement nor proposed legislation has the effect of changes in actual tax law, but these actions may lead to legislation in those countries in which we operate.

The negotiations and final outcome of the advanced pricing agreement, the passage of certain tax legislation described above, or both, could have a material adverse impact on the Company’s income tax provision, effective tax rate, and financial statements. However, we are not currently able to reasonably estimate the net impact(s) or associated timing of such events due to the uncertainties that remain and any potential interdependencies.

Net Income

As a result of the above, net income for the 39-week period ended September 30, 2023 was $747.5 million compared to $680.3 million for the 39-week period ended September 24, 2022, an increase of $67.2 million.

Liquidity and Capital Resources

We primarily use cash flow from operations, and expect that future cash requirements may be used, to fund our capital expenditures, support our working capital requirements, pay dividends, fund share repurchases, and fund strategic acquisitions. We believe that our existing cash balances and cash flow from operations will be sufficient to meet our short- and long-term projected working capital needs, capital expenditures, and other cash requirements.

Cash, Cash Equivalents, and Marketable Securities

As of September 30, 2023, we had approximately $2.8 billion of cash, cash equivalents and marketable securities. Management invests idle or surplus cash in accordance with the investment policy, which has been approved by the Company’s Board of Directors. The investment policy’s primary objectives are to preserve capital, maintain an acceptable degree of liquidity, and maximize yield within the constraint of low credit risk. Garmin’s average interest returns on cash and investments during the first three quarters of 2023 and 2022 were 2.6% and 1.2%, respectively. The fair value of our securities varies from period to period due to changes in interest rates, in the performance of the underlying collateral, and in the credit performance of the underlying issuer, among other factors. See Note 4 for additional information regarding marketable securities.

Cash Flows

Cash provided by operating activities totaled $910.3 million for the first three quarters of 2023, compared to $419.6 million for the first three quarters of 2022. The increase was primarily due to a lower use of cash on purchases of inventory, partially offset by a decrease in collections of accounts receivable in the first three quarters of 2023 compared to the first three quarters of 2022.

Cash used in investing activities totaled $267.7 million for the first three quarters of 2023, compared to $319.1 million for the first three quarters of 2022. The decrease was primarily due to net redemptions of marketable securities in the first three quarters of 2023, compared to the net purchases of marketable securities in the first three quarters of 2022, as well as a decrease in purchases of property and equipment, partially offset by cash used for acquisitions.

Cash used in financing activities totaled $486.2 million for the first three quarters of 2023, compared to $478.0 million for the first three quarters of 2022. This increase was primarily due to higher cash dividend payments in the first three quarters of 2023, as our declared dividend increased from $0.67 per share for the four calendar quarters beginning in June 2021 to $0.73 per share for the eight calendar quarters beginning in June 2022.

Use of Cash

Operating Leases

The Company has lease arrangements for certain real estate properties, vehicles, and equipment. Leased properties are typically used for office space, distribution, and retail. As of September 30, 2023, the Company had fixed lease payment obligations of $159.1 million, with $33.9 million payable within 12 months.

Inventory Purchase Obligations

The Company obtains various raw materials and components for its products from a variety of third party suppliers. The Company’s inventory purchase obligations are primarily noncancelable. As of September 30, 2023, the Company had inventory purchase obligations of $644.6 million, with $489.1 million payable within 12 months.

Other Purchase Obligations

The Company’s other purchase obligations primarily consist of noncancelable commitments for capital expenditures and other indirect purchases in connection with conducting our business. As of September 30, 2023, the Company had other purchase obligations of $299.8 million, with $112.3 million payable within 12 months.

Critical Accounting Policies and Estimates

General

Our discussion and analysis of financial condition and results of operations are based upon the Company’s condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The presentation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to customer sales programs and incentives, product returns, bad debts, inventories, investments, intangible assets, income taxes, warranty obligations, and contingencies and litigation. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For a description of the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements, refer to Note 1, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 and “Critical Accounting Policies and Estimates” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There were no significant changes to the Company’s critical accounting policies and estimates in the 13-week and 39-week periods ended September 30, 2023.