2018 Annual Report

2018 ANNUAL REPORT LETTER FROM THE CEO DEAR SHAREHOLDER, Garmin delivered solid financial results in 2018, our third consecutive year of consolidated revenue and profit growth. Our success was driven by strong performance by four of our five reportable segments, which reported double-digit revenue growth. The year offered much to celebrate, including the opening of our new manufacturing facility in Olathe, Kansas, which more than doubled our North American manufacturing capacity. This investment reinforces Garmin's continued commitment to our customers, associates, shareholders and community. We also shipped nearly 15 million units during the year and more than 205 million units since inception, including more than 1 million certified aviation products. We not only expanded our physical footprint but also our product lines and market presence by entering new product categories. Growth in the Aviation segment was driven by the ADS-B equipage mandate, new products and aircraft certifications, while growth in Outdoor and Fitness segments was driven by wearable product categories. The Marine segment grew at a faster rate than the market because of game-changing innovations and market share gains. While we continue to see a decline of the PND market size, our share of the market remains strong. We are very pleased with our accomplishments in 2018 and are optimistic about what we can achieve in the coming year. In 2019, Garmin will celebrate its 30th anniversary. As we reflect on how far we've come and the growth of our business, it is just as exciting to think about the possibilities that lie before us. We see opportunities in each of our segments and intend to capitalize on these by creating superior products that play an essential role in our customers' lives. I want to thank our shareholders for your interest in Garmin, and we look forward to another successful year together in 2019. CLIFF PEMBLE PRESIDENT AND CEO 2018 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 29, 2018 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-31983 GARMIN LTD. (Exact name of registrant as specified in its charter) Switzerland 98-0229227 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) Mühlentalstrasse 2 8200 Schaffhausen N/A Switzerland (Zip Code) (Address of principal executive offices) Registrant’s telephone number, including area code: +41 52 630 1600 Securities registered pursuant to Section 12(b) of the Act: Registered Shares, CHF 0.10 Per Share Par Value The Nasdaq Stock Market, LLC (Title of each class) (Name of each exchange on which registered) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES [√] NO [ ] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES [ ] NO [√ ] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [√] NO [ ] Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES [√ ] NO [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large Accelerated Filer [√ ] Accelerated Filer [ ] Non-accelerated Filer [ ] Smaller reporting company [ ] Emerging growth company [ ] If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.[ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [√ ] Aggregate market value of the common shares held by non-affiliates of the registrant as of June 30, 2018 (based on the closing price of the registrant's common shares on the Nasdaq Stock Market for June 29, 2018) was $7,753,502,173. Number of shares outstanding of the registrant’s common shares as of February 15, 2019: Registered Shares, CHF 0.10 par value – 198,077,418 (including treasury shares) Documents incorporated by reference: Portions of the following document are incorporated herein by reference into Part III of the Form 10-K as indicated: Part of Form 10-K into Document which Incorporated Company's Definitive Proxy Statement for the 2019 Annual Meeting of Shareholders which will Part III be filed no later than 120 days after December 29, 2018. Garmin Ltd. 2018 Form 10-K Annual Report Table of Contents Cautionary Statement With Respect To Forward-Looking Comments ....................................................... 4 Part I Item 1. Business ................................................................................................................................................. 4 Item 1A. Risk Factors........................................................................................................................................... 22 Item 1B. Unresolved Staff Comments ................................................................................................ 35 Item 2. Properties ............................................................................................................................................. 35 Item 3. Legal Proceedings ................................................................................................................................ 36 Item 4. Mine Safety Disclosures ....................................................................................................................... 36 Executive Officers of the Registrant ........................................................................................................................ 37 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ................................................................................................................................... 38 Item 6. Selected Financial Data ........................................................................................................................ 39 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ........................................................................................................................................... 42 Item 7A. Quantitative and Qualitative Disclosures About Market Risk .............................................................. 54 Item 8. Financial Statements and Supplementary Data ................................................................................... 57 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ............................................................................................................................................. 93 Item 9A. Controls and Procedures ...................................................................................................................... 93 Item 9B. Other Information ................................................................................................................................ 96 Part III Item 10. Directors, Executive Officers and Corporate Governance ................................................................... 97 Item 11. Executive Compensation ...................................................................................................................... 98 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ................................................................................................................................................ 98 Item 13. Certain Relationships and Related Transactions, and Director Independence .................................... 99 Item 14. Principal Accounting Fees and Services ............................................................................................... 99 Part IV Item 15. Exhibits, Financial Statement Schedules ...........................................................................................

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