Edgar Filing: GARMIN LTD

Unassociated Document

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 27, 2009

¨	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 Company as specified in its charter)

Cayman Islands (State or other jurisdiction of incorporation or organization)	98-0229227 (I.R.S. Employer identification no.)
P.O. Box 10670, Grand Cayman KY1-1006 Suite 3206B, 45 Market Street, Gardenia Court Camana Bay, Cayman Islands (Address of principal executive offices)	N/A (Zip Code)

Company's telephone number, including area code: (345) 640-9050

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ¨ NO ¨

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

Large Accelerated Filer þ Accelerated Filer ¨ Non-accelerated Filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO þ

Number of shares outstanding of the Company's common shares as of July 31, 2009

Common Shares, $.005 par value: 200,512,323

Garmin Ltd.

Form 10-Q

Quarter Ended June 27, 2009

Table of Contents

			Page
Part I - Financial Information

	Item 1.	Condensed Consolidated Financial Statements		3

		Introductory Comments		3

		Condensed Consolidated Balance Sheets at June 27, 2009 (Unaudited) and December 27, 2008		4

		Condensed Consolidated Statements of Income for the 13-weeks and 26-weeks ended June 27, 2009 and June 28, 2008 (Unaudited)		5

		Condensed Consolidated Statements of Cash Flows for the 13-weeks and 26-weeks ended June 27, 2009 and June 28, 2008 (Unaudited)		6

		Notes to Condensed Consolidated Financial Statements (Unaudited)		7

	Item 2.	Management's Discussion and Analysis of
		Financial Condition and Results of Operations		15

	Item 3.	Quantitative and Qualitative Disclosures About
		Market Risk		26

	Item 4.	Controls and Procedures		27

Part II - Other Information

	Item 1.	Legal Proceedings		28

	Item 1A.	Risk Factors		29

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		29

	Item 3.	Defaults Upon Senior Securities		30

	Item 4.	Submission of Matters to a Vote of Securities Holders		30

	Item 5.	Other Information		30

	Item 6.	Exhibits		31

Signature Page				32

Index to Exhibits				33

Garmin Ltd.

Form 10-Q

Quarter Ended June 27, 2009

Part I – Financial Information

Item 1. Condensed Consolidated Financial Statements

Introductory Comments

The Condensed Consolidated Financial Statements of Garmin Ltd. ("Garmin" or the "Company") included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented. These Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 27, 2008. Additionally, the Condensed Consolidated Financial Statements should be read in conjunction with Item 2 of Management's Discussion and Analysis of Financial Condition and Results of Operations, included in this Form 10-Q.

The results of operations for the 13-week and 26-week periods ended June 27, 2009 are not necessarily indicative of the results to be expected for the full year 2009.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share information)

	(Unaudited)
	June 27,			December 27,
	2009			2008
Assets
Current assets:
Cash and cash equivalents	$	958,909		$	696,335
Marketable securities		18,889			12,886
Accounts receivable, net		519,433			741,321
Inventories, net		323,161			425,312
Deferred income taxes		59,331			49,825
Prepaid expenses and other current assets		65,081			58,746

Total current assets		1,944,804			1,984,425

Property and equipment, net		443,026			445,252

Marketable securities		524,935			262,009
Restricted cash		2,066			1,941
Licensing agreements, net		20,647			16,013
Other intangible assets, net		208,888			214,941

Total assets	$	3,144,366		$	2,924,581

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	137,360		$	160,094
Salaries and benefits payable		28,396			34,241
Accrued warranty costs		79,968			87,408
Accrued sales program costs		69,554			90,337
Other accrued expenses		94,118			87,021
Income taxes payable		20,142			20,075

Total current liabilities		429,538			479,176

Deferred income taxes		14,514			4,070
Non-current taxes		236,927			214,366
Other liabilities		1,231			1,115

Stockholders' equity:
Common stock, $0.005 par value, 1,000,000,000 shares authorized:
Issued and outstanding shares - 200,505,000 as of
June 27, 2009 and 200,363,000 as of
December 27, 2008		1,000			1,002
Additional paid-in capital		23,264			-
Retained earnings		2,472,912			2,262,503
Accumulated other comprehensive gain/(loss)		(35,020	)		(37,651	)

Total stockholders' equity		2,462,156			2,225,854
Total liabilities and stockholders' equity	$	3,144,366		$	2,924,581

See accompanying notes.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share information)

	13-Weeks Ended					26-Weeks Ended
	June 27,			June 28,		June 27,			June 28,
	2009			2008		2009			2008

Net sales	$	669,104		$	911,671	$	1,105,803		$	1,575,476

Cost of goods sold		317,490			494,543		558,194			838,233

Gross profit		351,614			417,128		547,609			737,243

Advertising expense		34,023			58,327		57,248			96,456
Selling, general and administrative expense		62,186			66,701		121,963			126,397
Research and development expense		56,253			53,597		111,287			103,154
Total operating expense		152,462			178,625		290,498			326,007

Operating income		199,152			238,503		257,111			411,236

Interest income		5,190			9,801		10,286			18,127
Foreign currency		(4,836	)		21,561		(7,274	)		17,562
Gain on sale of equity securities		-			45,686		-			50,949
Other		335			612		(359	)		732
Total other income		689			77,660		2,653			87,370

Income before income taxes		199,841			316,163		259,764			498,606

Income tax provision		37,970			60,071		49,355			94,735

Net income	$	161,871		$	256,092	$	210,409		$	403,871

Net income per share:
Basic	$	0.81		$	1.20	$	1.05		$	1.88
Diluted	$	0.81		$	1.19	$	1.05		$	1.86

Weighted average common
shares outstanding:
Basic		200,296			213,756		200,364			215,130
Diluted		200,853			215,572		200,814			217,274

See accompanying notes.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	26-Weeks Ended
	June 27,			June 28,
	2009			2008
Operating Activities:
Net income	$	210,409		$	403,871
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		26,335			18,690
Amortization		15,914			8,430
Gain on sale of property and equipment		(108	)		(208	)
Provision for doubtful accounts		(5,223	)		3,977
Deferred income taxes		(718	)		17,342
Foreign currency transaction gains/losses		(4,493	)		25,428
Provision for obsolete and slow moving inventories		14,111			28,326
Stock compensation expense		21,029			18,253
Realized gains on marketable securities		(1,274	)		(72,445	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		233,166			307,580
Inventories		89,044			(141,180	)
Other current assets		(2,415	)		8,110
Accounts payable		(23,175	)		(213,507	)
Other current and non-current liabilities		(4,838	)		(102,909	)
Income taxes payable		(5,140	)		(25,341	)
Purchase of licenses		(6,936	)		(4,236	)
Net cash provided by operating activities		555,688			280,181

Investing activities:
Purchases of property and equipment		(23,343	)		(79,917	)
Proceeds from sale of property and equipment		(7	)		8
Purchase of intangible assets		(3,496	)		(997	)
Purchase of marketable securities		(341,423	)		(344,119	)
Redemption of marketable securities		68,173			390,179
Change in restricted cash		(125	)		14
Acquisitions, net of cash acquired		0			(34,768	)
Net cash used in investing activities		(300,221	)		(69,600	)

Financing activities:
Proceeds from issuance of common stock from exercise of stock options		310			2,050
Proceeds from issuance of common stock from stock purchase plan		3,712			5,144
Stock repurchase		(1,849	)		(318,471	)
Tax benefit related to stock option exercise		65			1,965
Net cash provided by/(used in) financing activities		2,238			(309,312	)

Effect of exchange rate changes on cash and cash equivalents		4,869			15,524

Net increase/(decrease) in cash and cash equivalents		262,574			(83,207	)
Cash and cash equivalents at beginning of period		696,335			707,689
Cash and cash equivalents at end of period	$	958,909		$	624,482

See accompanying notes.

Garmin Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 27, 2009

(In thousands, except share and per share information)

1.	Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the 13-week and 26-week periods ended June 27, 2009 are not necessarily indicative of the results that may be expected for the year ending December 26, 2009.

The condensed consolidated balance sheet at December 27, 2008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 27, 2008.

The Company’s fiscal year is based on a 52-53 week period ending on the last Saturday of the calendar year. Therefore the financial results of certain fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated quarters having only 13-weeks. The quarters ended June 27, 2009 and June 28, 2008 both contain operating results for 13-weeks for both year-to-date periods.

2.	Inventories

The components of inventories consist of the following:

	June 27, 2009			December 27, 2008

Raw Materials	$	97,118		$	151,132
Work-in-process		37,819			28,759
Finished goods		216,304			268,625
Inventory Reserves		(28,080	)		(23,204	)
Inventory, net of reserves	$	323,161		$	425,312

Share Repurchase Plan

The Board of Directors approved a share repurchase program on October 22, 2008, authorizing the Company to purchase up to $300,000 of its common shares as market and business conditions warrant. The share repurchase authorization expires on December 31, 2009. As of June 27, 2009, the Company had repurchased 117,600 shares using cash of $1,849 with all purchases made in the first quarter. There remains approximately $256,000 available for repurchase under this authorization given the $42,000 of purchases in fiscal 2008.

4.	Earnings Per Share

The following table sets forth the computation of basic and diluted net income per share:

	13-Weeks Ended
	June 27,		June 28,
	2009		2008
Numerator:
Numerator for basic and diluted net income per share - net income	$	161,871	$	256,092

Denominator:
Denominator for basic net income per share – weighted-average common shares		200,296		213,756

Effect of dilutive securities – employee stock options		557		1,816

Denominator for diluted net income per share – adjusted weighted-average common shares		200,853		215,572

Basic net income per share	$	0.81	$	1.20

Diluted net income per share	$	0.81	$	1.19

	26-Weeks Ended
	June 27,		June 28,
	2009		2008
Numerator:
Numerator for basic and diluted net income per share - net income	$	210,409	$	403,871

Denominator:
Denominator for basic net income per share – weighted-average common shares		200,364		215,130

Effect of dilutive securities – employee stock options		450		2,144

Denominator for diluted net income per share – adjusted weighted-average common shares		200,814		217,274

Basic net income per share	$	1.05	$	1.88

Diluted net income per share	$	1.05	$	1.86

There were 7,948,978 anti-dilutive options for the 13-week period ended June 27, 2009. There were 5,408,834 anti-dilutive options for the 13-week period ended June 28, 2008.

There were 8,548,181 anti-dilutive options for the 26-week period ended June 27, 2009. There were 5,049,164 anti-dilutive options for the 26-week period ended June 28, 2008.

There were 12,622 shares issued as a result of exercises of stock appreciation rights and stock options for the 13-week period ended June 27, 2009.

There were 24,720 shares issued as a result of exercises of stock appreciation rights and stock options for the 26-week period ended June 27, 2009.

5.	Comprehensive Income

Comprehensive income is comprised of the following:

	13-Weeks Ended
	June 27,			June 28,
	2009			2008
Net income	$	161,871		$	256,092
Translation adjustment		26,236			(18,790	)
Change in fair value of available-for-sale
marketable securities, net of deferred taxes		1,199			(24,291	)
Comprehensive income	$	189,306		$	213,011

	26-Weeks Ended
	June 27,			June 28,
	2009			2008
Net income	$	210,409		$	403,871
Translation adjustment		7,473			61,004
Change in fair value of available-for-sale
marketable securities, net of deferred taxes		(4,842	)		(57,265	)
Comprehensive income	$	213,040		$	407,610

6.	Segment Information

Net sales, operating income, and income before taxes for each of the Company’s reportable segments are presented below:

	Reportable Segments
	Outdoor/				Auto/
	Fitness		Marine		Mobile		Aviation		Total
13-Weeks Ended June 27, 2009

Net sales	$	108,009	$	60,198	$	436,718	$	64,179	$	669,104
Operating income	$	50,416	$	21,342	$	106,712	$	20,682	$	199,152
Income before taxes	$	51,255	$	21,722	$	105,474	$	21,390	$	199,841

13-Weeks Ended June 28, 2008

Net sales	$	119,147	$	71,178	$	631,883	$	89,463	$	911,671
Operating income	$	45,445	$	24,068	$	129,190	$	39,800	$	238,503
Income before taxes	$	55,302	$	27,905	$	191,855	$	41,101	$	316,163

26-Weeks Ended June 27, 2009

Net sales	$	188,013	$	98,215	$	696,304	$	123,271	$	1,105,803
Operating income	$	78,920	$	31,914	$	111,318	$	34,959	$	257,111
Income before taxes	$	78,915	$	31,444	$	114,632	$	34,773	$	259,764

26-Weeks Ended June 28, 2008

Net sales	$	189,641	$	127,185	$	1,083,742	$	174,908	$	1,575,476
Operating income	$	64,756	$	41,904	$	236,831	$	67,745	$	411,236
Income before taxes	$	75,749	$	47,238	$	304,159	$	71,460	$	498,606

Allocation of certain research and development expenses, and selling, general, and administrative expenses are made to each segment on a percent of revenue basis.

Net sales and property and equipment, net by geographic area are as follows as of and for the 26-week periods ended June 27, 2009 and June 28, 2008:

	Americas		Asia		Europe		Total
June 27, 2009
Net sales to external customers	$	701,603	$	64,026	$	340,174	$	1,105,803
Property and equipment, net	$	228,976	$	159,931	$	54,119	$	443,026

June 28, 2008
Net sales to external customers	$	987,440	$	70,685	$	517,351	$	1,575,476
Property and equipment, net	$	209,481	$	184,041	$	56,205	$	449,727

7.	Warranty Reserves

The Company’s products sold are generally covered by a warranty for periods ranging from one to two years. The Company’s estimate of costs to service its warranty obligations are based on historical experience and expectation of future conditions and are recorded as a liability on the balance sheet. The following reconciliation provides an illustration of changes in the aggregate warranty reserve.

	13-Weeks Ended
	June 27,			June 28,
	2009			2008

Balance - beginning of the period	$	68,847		$	72,751
Accrual for products sold during the period		31,106			37,666
Expenditures		(19,985	)		(26,498	)
Balance - end of the period	$	79,968		$	83,919

	26-Weeks Ended
	June 27,			June 28,
	2009			2008

Balance - beginning of the period	$	87,408		$	71,636
Accrual for products sold during the period		49,621			72,987
Expenditures		(57,061	)		(60,704	)
Balance - end of the period	$	79,968		$	83,919

8.	Commitments

We are a party to certain commitments, which includes raw materials, advertising and other indirect purchases in connection with conducting out business. Pursuant to these agreements, the Company is contractually committed to make purchases of approximately $37,200 over the next 5 years.

9. Income Taxes

Our earnings before taxes decreased 36.8% when compared to the same quarter in 2008, and our income tax expense decreased by $22,101, to $37,970, for the 13-week period ended June 27, 2009, from $60,071 for the 13-week period ended June 28, 2008, due to our earnings before taxes decline. The effective tax rate was 19.0% for both the 13-weeks and 26-weeks ended June 27, 2009 and the 13-weeks and 26-weeks ended June 28, 2008. We have experienced a relatively low effective corporate tax rate due to the proportion of our revenue generated by entities in tax jurisdictions with low statutory rates. In particular, the profit entitlement afforded our parent company based on its intellectual property rights ownership of our consumer products along with substantial tax incentives offered by the Taiwanese government on certain high-technology capital investments have continued to generate a relatively low tax rate.

10. Fair Value Measurements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements. The Company adopted SFAS No. 157 effective December 30, 2007.

SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). SFAS No. 157 classifies the inputs used to measure fair value into the following hierarchy:

Level 1

Unadjusted quoted prices in active markets for identical assets or liability

Level 2

Unadjusted quoted prices in active markets for similar assets or liabilities, or

Unadjustedquoted prices for identical or similar assets

Level 3

Unobservable inputs for the asset or liability

The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

For fair value measurements using significant unobservable inputs, an independent third party provided the valuation. The inputs used in the valuations used the following methodology. The collateral composition was used to estimate Weighted Average Life based on historical and projected payment information. Cash flows were projected for the issuing trusts, taking into account underlying loan principal, bonds outstanding, and payout formulas. Taking this information into account, assumptions were made as to the yields likely to be required, based upon then current market conditions for comparable or similar term Asset Based Securities as well as other fixed income securities.

Assets and liabilities measured at estimated fair value on a recurring basis are summarized below:

	Fair Value Measurements as
	of June 27, 2009

Description	Total		Level 1		Level 2		Level 3

Available for-sale securites	$	475,995	$	475,995		-		-
Failed Auction rate securities		67,829		-		-		67,829

Total	$	543,824	$	475,995	$	-	$	67,829

For assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period, SFAS No. 157 requires a reconciliation of the beginning and ending balances, separately for each major category of assets. The reconciliation is as follows:

	Fair Value Measurements Using
	Significant Unobservable Inputs (Level 3)
	13-Weeks Ended		26-Weeks Ended
	June 27, 2009		June 27, 2009

Beginning balance of auction rate securities	$	65,544	$	71,303
Total unrealized losses included in other comprehensive income		2,285		(3,474	)
Purchases in and/or out of Level 3		-		-
Transfers in and/or out of Level 3		-		-
Ending balance of auction rate securities	$	67,829	$	67,829

The following is a summary of the company’s marketable securities classified as available-for-sale securities at June 27, 2009:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Other Than Temporary Impairment			Estimated Fair Value (Net Carrying Amount)
Mortgage-backed securities	$	337,865	$	1,499	$	(2,904	)		-		$	336,460
Auction rate securities		92,750		-		(24,921	)		-			67,829
Obligations of states and political subdivisions		85,961		685		(430	)		-			86,216
U.S. corporate bonds		33,555		367		(1,372	)		(1,274	)		31,276
Other		22,157		273		(387	)		-			22,043
Total	$	572,288	$	2,824	$	(30,014	)	$	(1,274	)	$	543,824

The following is a summary of the company’s marketable securities classified as available-for-sale securities at December 27, 2008:

			Gross		Gross			Other Than		Estimated Fair Value (Net
	Amortized		Unrealized		Unrealized			Temporary		Carrying
	Cost		Gains		Losses			Impairment		Amount)
Mortgage-backed securities	$	137,854	$	1,184	$	(140	)		-	$	138,898
Auction rate securities		92,850		-		(21,547	)		-		71,303
Obligations of states and political subdivisions		40,336		960		(12	)		-		41,284
U.S. corporate bonds		16,545		200		(2,707	)		-		14,038
Other		9,502		79		(209	)		-		9,372
Total	$	297,087	$	2,423	$	(24,615	)	$	0	$	274,895

The cost of securities sold is based on the specific identification method.

The unrealized losses on the Company’s investment in 2008 and year-to-date 2009 were caused primarily by changes in interest rates, specifically, widening credit spreads. The Company’s investment policy requires investments to be rated A or better with the objective of minimizing the potential risk of principal loss. Therefore, the Company considers the declines to be temporary in nature. Fair values were determined for each individual security in the investment portfolio. When evaluating the investments for other-than-temporary impairment, the Company review factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, and the Company’s ability and intent to hold the investment for a period of time, which may be sufficient for anticipated recovery in market value. During 2008 and year-to-date 2009, the Company did not record any material impairment charges on its outstanding securities.

The amortized cost and estimated fair value of marketable securities at June 27, 2009, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.

			Estimated
	Cost		Fair Value

Due in one year or less	$	28,756	$	28,909
Due after one year through five years		243,194		217,733
Due after five years through ten years		151,202		149,890
Due after ten years		149,136		147,292
	$	572,288	$	543,824

For certain of the Company’s financial instruments, including accounts receivable, accounts payable and other accrued liabilities, the carrying amounts approximate fair value due to their short maturities.

11. Recently Issued Accounting Pronouncements

In May 2008, the FASB issued EITF 07-1, Accounting for Collaborative Arrangements. EITF Issue 07-1 requires entities entering into collaborative arrangements in which two or more parties actively participate in a joint operating activity and are exposed to significant risks and rewards that depend on the commercial success of the joint operating activity to make specific disclosures regarding that arrangement. Garmin announced a strategic alliance with ASUSTeK Computer Inc. on February 4, 2009 that will leverage the companies’ navigation and mobile telephony expertise to design, manufacture and distribute co-branded location-centric mobile phones. The mobile phone product line will be known as the Garmin-Asus nüvifone series. The Company has adopted EITF Issue 07-1 and the strategic alliance did not have a material impact on the Company’s financial condition or operating results in the second quarter of 2009.

In January 2009, the FASB released Proposed Staff Position SFAS 107-b and Accounting Principles Board (APB) Opinion No. 28-a, “Interim Disclosures about Fair Value of Financial Instruments” (SFAS 107-b and APB 28-a). This proposal amends FASB Statement No. 107, “Disclosures about Fair Values of Financial Instruments,” to require disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements. The proposal also amends APB Opinion No. 28, “Interim Financial Reporting,” to require those disclosures in all interim financial statements. This proposal is effective for interim periods ending after June 15, 2009, but early adoption is permitted for interim periods ending after March 15, 2009. The Company has adopted SFAS 107-b and APB 28-a and the guidance did not have a material impact on the Company’s financial condition or operating results in the second quarter of 2009.

In April 2009, the FASB issued FSP No. FAS 157-4 (“FSP FAS 157-4”), “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability has Significantly Decreased and Identifying Transactions That Are Not Orderly” and FSP No. FAS 115-2 and FAS 124-2 (“FSP FAS 115-2”), “Recognition and Presentation of Other-Than-Temporary Impairments”. These two FSPs were issued to provide additional guidance about (1) measuring the fair value of financial instruments when the markets become inactive and quoted prices may reflect distressed transactions, and (2) recording impairment charges on investments in debt instruments. Additionally, the FASB issued FSP No. FAS 107-1 and APB 28-1 (“FSP FAS 107-1”), “Interim Disclosures about Fair Value of Financial Instruments,” to require disclosures of fair value of certain financial instruments in interim financial statements. The adoption of these FSPs did not materially impact the Company. These FSPs are effective for financial statements issued for interim and annual reporting periods ending after June 15, 2009. The Company has adopted FSP FAS 157-4 and the guidance did not have a material impact on the Company’s financial condition or operating results in the second quarter of 2009.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 is effective for interim or annual financial periods ending after June 15, 2009. The Company adopted the provisions of SFAS 165 for the quarter ended June 27, 2009. The adoption of this provision did not have a material effect on our financial statements.

12. Subsequent Events

On July 30, 2009, the Company’s Board of Directors approved an annual cash dividend of $0.75 per share. The dividend is payable to shareholders of record on December 1, 2009 and will be paid on December 15, 2009. The Company estimates the liability to be approximately $150,000 based on the current shares outstanding.

The Company evaluated subsequent events through the time of filing this Quarterly Report on Form 10-Q on August 5, 2009.

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, contains statements concerning potential future events. Such forward-looking statements are based upon assumptions by our 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 our assumptions prove incorrect or should unanticipated circumstances arise, our 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 the Company’s Annual Report on Form 10-K for the year ended December 27, 2008. 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 web site on the World Wide Web 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 27, 2008.

The Company is a leading worldwide provider of navigation, communications and information devices, most of which are enabled by Global Positioning System, or GPS, technology. We operate in four business segments, the outdoor/fitness, marine, automotive/mobile and aviation markets. Our segments offer products through our network of independent dealers and distributors. However, the nature of products and types of customers for the four segments may vary significantly. As such, the segments are managed separately.

Results of Operations

The following table sets forth our results of operations as a percentage of net sales during the periods shown:

	13-Weeks Ended
	June 27, 2009			June 28, 2008

Net sales		100.0	%		100.0	%
Cost of goods sold		47.4	%		54.2	%
Gross profit		52.6	%		45.8	%
Advertising		5.1	%		6.4	%
Selling, general and administrative		9.3	%		7.3	%
Research and development		8.4	%		5.9	%
Total operating expenses		22.8	%		19.6	%
Operating income		29.8	%		26.2	%
Other income (expense), net		0.1	%		8.5	%
Income before income taxes		29.9	%		34.7	%
Provision for income taxes		5.7	%		6.6	%
Net income		24.2	%		28.1	%

	26-Weeks Ended
	June 27, 2009			June 28, 2008

Net sales		100.0	%		100.0	%
Cost of goods sold		50.5	%		53.2	%
Gross profit		49.5	%		46.8	%
Advertising		5.2	%		6.1	%
Selling, general and administrative		11.0	%		8.0	%
Research and development		10.1	%		6.6	%
Total operating expenses		26.3	%		20.7	%
Operating income		23.2	%		26.1	%
Other income (expense), net		0.2	%		5.5	%
Income before income taxes		23.4	%		31.6	%
Provision for income taxes		4.4	%		6.0	%
Net income		19.0	%		25.6	%

The Company manages its operations in four segments: outdoor/fitness, marine, automotive/mobile, and aviation, and each of its segments employs the same accounting policies. Allocation of certain research and development expenses, and selling, general, and administrative expenses are made to each segment on a percent of revenue basis. The following table sets forth our results of operations (in thousands) including revenue (net sales), operating income, and income before taxes for each of our four segments during the periods shown. For each line item in the table, the total of the outdoor/fitness, marine, automotive/mobile, and aviation segments' amounts equals the amount in the condensed consolidated statements of income included in Item 1.

	Reportable Segments
	Outdoor/				Auto/
	Fitness		Marine		Mobile		Aviation		Total
13-Weeks Ended June 27, 2009

Net sales	$	108,009	$	60,198	$	436,718	$	64,179	$	669,104
Operating income	$	50,416	$	21,342	$	106,712	$	20,682	$	199,152
Income before taxes	$	51,255	$	21,722	$	105,474	$	21,390	$	199,841

13-Weeks Ended June 28, 2008

Net sales	$	119,147	$	71,178	$	631,883	$	89,463	$	911,671
Operating income	$	45,445	$	24,068	$	129,190	$	39,800	$	238,503
Income before taxes	$	55,302	$	27,905	$	191,855	$	41,101	$	316,163

26-Weeks Ended June 27, 2009

Net sales	$	188,013	$	98,215	$	696,304	$	123,271	$	1,105,803
Operating income	$	78,920	$	31,914	$	111,318	$	34,959	$	257,111
Income before taxes	$	78,915	$	31,444	$	114,632	$	34,773	$	259,764

26-Weeks Ended June 28, 2008

Net sales	$	189,641	$	127,185	$	1,083,742	$	174,908	$	1,575,476
Operating income	$	64,756	$	41,904	$	236,831	$	67,745	$	411,236
Income before taxes	$	75,749	$	47,238	$	304,159	$	71,460	$	498,606

Comparison of 13-Weeks Ended June 27, 2009 and June 28, 2008

(Amounts included in the following discussion are stated in thousands unless otherwise indicated)

Net Sales

	13-weeks ended June 27, 2009					13-weeks ended June 28, 2008					Quarter over Quarter
	Net Sales		% of Revenues			Net Sales		% of Revenues			$ Change			% Change
Outdoor/Fitness	$	108,009		16.1	%	$	119,147		13.1	%	$	(11,138	)		-9.3	%
Marine		60,198		9.0	%		71,178		7.8	%		(10,980	)		-15.4	%
Automotive/Mobile		436,718		65.3	%		631,883		69.3	%		(195,165	)		-30.9	%
Aviation		64,179		9.6	%		89,463		9.8	%		(25,284	)		-28.3	%
Total	$	669,104		100.0	%	$	911,671		100.0	%	$	(242,567	)		-26.6	%

Net sales decreased 26.6% for the 13-week period ended June 27, 2009 when compared to the year-ago quarter. The decline occurred across all segments with the greatest decline in the automotive/mobile segment, as well as aviation. Automotive/mobile revenue remains the largest portion of our revenue mix, but declined from 69.3% in the second quarter of 2008 to 65.3% in the second quarter of 2009.

Total unit sales decreased 5% to 3,715,000 in the second quarter of 2009 from 3,920,000 in the same period of 2008. The lower unit sales volume in the second quarter of fiscal 2009 was attributable to declining volumes across all segments with the greatest percentage declines occurring in aviation and marine.

Automotive/mobile segment revenue declined 31% from the year-ago quarter, as the average selling price declined 28% and volumes fell 4%. This segment has slowed due to global macroeconomic conditions which have especially impacted growth in North America and Europe. The aviation and marine segments declined 28% and 15%, respectively, from the year-ago quarter as both industries experience significant slowdowns associated with the macroeconomic conditions. Revenues in our outdoor/fitness segment declined 9% from the year ago quarter when we introduced many new products in the segment.

Gross Profit

	13-weeks ended June 27, 2009					13-weeks ended June 28, 2008					Quarter over Quarter
	Gross Profit		% of Revenues			Gross Profit		% of Revenues			$ Change			% Change
Outdoor/Fitness	$	73,215		67.8	%	$	67,908		57.0	%	$	5,307			7.8	%
Marine		35,780		59.4	%		40,120		56.4	%		(4,340	)		-10.8	%
Automotive/Mobile		195,075		44.7	%		243,720		38.6	%		(48,645	)		-20.0	%
Aviation		47,544		74.1	%		65,380		73.1	%		(17,836	)		-27.3	%
Total	$	351,614		52.6	%	$	417,128		45.8	%	$	(65,514	)		-15.7	%

Gross profit dollars in the second quarter of 2009 fell 15.7% while gross profit margin increased 680 basis points compared to the second quarter of 2008. Second quarter gross profit margins increased in all segments, when compared to the same quarter in 2008. Second quarter 2009 gross profit margin improvements were greatest in the outdoor/fitness and automotive/mobile segments at 1080 basis points and 610 basis points, respectively.

The automotive/mobile segment’s margin increase was driven by a decrease in per unit cost partially offset by average selling price reductions. The per unit cost benefits were driven by foreign currency fluctuations, material cost reductions, and other cost savings. The impact to total company gross margin of the automotive/mobile segment declined as it fell to 55.5% of total gross margin from 58.4% in the year-ago quarter. The Company also benefited from increased margins in the outdoor/fitness, aviation and marine segments due to stable or increased pricing and decreases in per unit costs. Gross margins were most improved in the outdoor/fitness segment, as pricing was stable and the product mix shifted toward higher margin units. Aviation and marine gross margins increased 100 basis points and 300 basis points, respectively, from the year-ago quarter.

Advertising Expense

	13-weeks ended June 27, 2009					13-weeks ended June 28, 2008					Quarter over Quarter
	Advertising		% of Revenues			Advertising		% of Revenues			$ Change			% Change
Outdoor/Fitness	$	6,133		5.7	%	$	7,534		6.3	%	$	(1,401	)		-18.6	%
Marine		3,253		5.4	%		5,596		7.9	%		(2,343	)		-41.9	%
Automotive/Mobile		23,520		5.4	%		43,387		6.9	%		(19,867	)		-45.8	%
Aviation		1,117		1.7	%		1,810		2.0	%		(693	)		-38.3	%
Total	$	34,023		5.1	%	$	58,327		6.4	%	$	(24,304	)		-41.7	%

Advertising expense decreased both as a percentage of sales and in absolute dollars when compared with the year-ago period. As a percent of sales, advertising expenses declined to 5.1% in the second quarter of 2009 compared to 6.4% in second quarter of 2008. The decrease was a result of actions taken by the Company to reduce costs as the macroeconomic conditions impacted sales across our segments and around the world.

Selling, General and Administrative Expense

	13-weeks ended June 27, 2009					13-weeks ended June 28, 2008
	Selling, General &					Selling, General &					Quarter over Quarter
	Admin. Expenses		% of Revenues			Admin. Expenses		% of Revenues			$ Change			% Change
Outdoor/Fitness	$	10,834		10.0	%	$	8,298		7.0	%	$	2,536			30.6	%
Marine		5,797		9.6	%		5,620		7.9	%		177			3.1	%
Automotive/Mobile		40,016		9.2	%		47,762		7.6	%		(7,746	)		-16.2	%
Aviation		5,539		8.6	%		5,021		5.6	%		518			10.3	%
Total	$	62,186		9.3	%	$	66,701		7.3	%	$	(4,515	)		-6.8	%

Selling, general and administrative expense decreased in absolute dollars while increasing as a percentage of sales compared to the year-ago quarter as costs throughout the Company were reduced but not as rapidly as the revenue declines. Cost reductions related to headcount reductions primarily in operations and reduced bad debt expense in the current year. The increased expense for the outdoor/fitness segment is driven by the allocation of costs based on revenues. As outdoor/fitness revenues have increased as a percentage of revenues, additional selling, general and administrative expenses are shifted to the segment. As a percent of sales, selling, general and administrative expenses increased from 7.3% of sales in the second quarter of 2008 to 9.3% of sales in the second quarter of 2009, as revenues declined.

Research and Development Expense

	13-weeks ended June 27, 2009					13-weeks ended June 28, 2008
	Research &					Research &					Quarter over Quarter
	Development		% of Revenues			Development		% of Revenues			$ Change			% Change
Outdoor/Fitness	$	5,832		5.4	%	$	6,631		5.6	%	$	(799	)		-12.1	%
Marine		5,388		9.0	%		4,836		6.8	%		552			11.4	%
Automotive/Mobile		24,827		5.7	%		23,381		3.7	%		1,446			6.2	%
Aviation		20,206		31.5	%		18,749		21.0	%		1,457			7.8	%
Total	$	56,253		8.4	%	$	53,597		5.9	%	$	2,656			5.0	%

The 5.0% increase in research and development expense was due to ongoing development activities for new products and the addition of almost 200 new engineering personnel to our staff since the year-ago quarter as a result of our continued emphasis on product innovation. Research and development costs increased $2.7 million when compared with the year-ago quarter representing a 250 basis point increase as a percent of revenue, due to the 27% revenue decline.

Operating Income

	13-weeks ended June 27, 2009					13-weeks ended June 28, 2008					Quarter over Quarter
	Operating Income		% of Revenues			Operating Income		% of Revenues			$ Change			% Change
Outdoor/Fitness	$	50,416		46.7	%	$	45,445		38.1	%	$	4,971			10.9	%
Marine		21,342		35.5	%		24,068		33.8	%		(2,726	)		-11.3	%
Automotive/Mobile		106,712		24.4	%		129,190		20.4	%		(22,478	)		-17.4	%
Aviation		20,682		32.2	%		39,800		44.5	%		(19,118	)		-48.0	%
Total	$	199,152		29.8	%	$	238,503		26.2	%	$	(39,351	)		-16.5	%

Operating income increased 360 basis points as a percent of revenue when compared to the second quarter of 2008 as declining revenues and continued growth in research and development expense associated with ongoing development activities were offset by gross margin improvement.

Other Income (Expense)

	13-weeks ended			13-weeks ended
	June 27, 2009			June 28, 2008
Interest Income	$	5,190		$	9,801
Foreign Currency Exchange		(4,836	)		21,561
Gain on sale of equity securities		-			45,686
Other		335			612
Total	$	689		$	77,660

The average interest rate return on cash and investments during the second quarter of 2009 was 1.5% compared to 3.6% during the same quarter of 2008. The decrease in interest income is attributable to decreasing interest rates.

Foreign currency gains and losses for the Company are primarily tied to movements by the Taiwan Dollar, the Euro, and the British Pound Sterling. The U.S. Dollar remains the functional currency of Garmin (Europe) Ltd. The Euro is the functional currency of all other European subsidiaries excluding Garmin Danmark and Garmin Sweden. As these entities have grown, Euro currency moves generate material gains and losses. Additionally, Euro-based inter-company transactions in Garmin Ltd. can also generate currency gains and losses. The Canadian Dollar and Danish Krone, and Swedish Krona are the functional currency of Dynastream Innovations, Inc., Garmin Danmark, and Garmin Sweden respectively; due to these entities’ relative size, currency moves are not expected to have a material impact on the Company’s financial statements.

The majority of the $4.8 million currency loss in the second quarter of 2009 was due to the weakening of the U.S. Dollar compared to the Euro, the British Pound Sterling, and the Taiwan Dollar. The relative strength of the Taiwan Dollar and Euro have offsetting impacts due to the use of the Taiwan Dollar for manufacturing costs while the Euro transactions relate to revenue. During the second quarter of 2009, the U.S. Dollar weakened 4.4% and 14.3%, respectively, compared to the Euro and the British Pound Sterling, resulting in a gain of $12.9 million. Offsetting this gain was a loss of $16.4 million due to the U.S. Dollar weakening 2.6% against the Taiwan Dollar. The remaining net currency loss of $1.3 million related to other currencies and timing of transactions.

The majority of the $21.6 million currency gain in the second quarter of 2008 was related to the tender of our Tele Atlas N.V. shares. This transaction generated a realized gain of $20.4 million due to the strengthening of the Euro between the date of purchase of the shares in October 2007 to the date of tender in June 2008.

The gain on sale of equity securities of $45.7 million in the second quarter of 2008 was generated from the sale of a portion of our equity interest in Tele Atlas N.V.

Income Tax Provision

Our earnings before taxes decreased 37% when compared to the same quarter in 2008, and our income tax expense decreased similarly by $22.1 million, to $38.0 million, for the 13-week period ended June 27, 2009, from $60.1 million for the 13-week period ended June 28, 2008. The effective tax rate was 19.0% in the second quarter of 2009 and the second quarter of 2008.

Net Income

As a result of the above, net income decreased 37% for the 13-week period ended June 27, 2009 to $161.9 million compared to $256.1 million for the 13-week period ended June 28, 2008.

Comparison of 26-Weeks Ended June 27, 2009 and June 28, 2008

(Amounts included in the following discussion are stated in thousands unless otherwise indicated)

Net Sales

	26-weeks ended June 27, 2009					26-weeks ended June 28, 2008					Quarter over Quarter
	Net Sales		% of Revenues			Net Sales		% of Revenues			$ Change			% Change
Outdoor/Fitness	$	188,013		17.0	%	$	189,641		12.0	%	$	(1,628	)		-0.9	%
Marine		98,215		8.9	%		127,185		8.1	%		(28,970	)		-22.8	%
Automotive/Mobile		696,304		62.9	%		1,083,742		68.8	%		(387,438	)		-35.8	%
Aviation		123,271		11.2	%		174,908		11.1	%		(51,637	)		-29.5	%
Total	$	1,105,803		100.0	%	$	1,575,476		100.0	%	$	(469,673	)		-29.8	%

Net sales decreased 29.8% for the 26-week period ended June 27, 2009 when compared to the year-ago period. The decline occurred across all segments with the greatest decline in the automotive/mobile segment, as well as aviation. Automotive/mobile revenue remains the largest portion of our revenue mix, but declined from 68.8% in the first half of 2008 to 62.9% in the first half of 2009.

Total unit sales decreased 9% to 6,132,000 in the first half of 2009 from 6,707,000 in the same period of 2008. The lower unit sales volume in the first half of fiscal 2009 was attributable to declining volumes across all segments with the greatest percentage declines occurring in aviation and marine.

Automotive/mobile segment revenue declined 35.8% from the year-ago period, as the average selling price declined 30% and volumes declined 9%. The aviation and marine segments declined 29.5% and 22.8%, respectively, from the year-ago period as both industries experience significant slowdowns associated with the macroeconomic conditions. Outdoor/fitness segment revenue declined 0.9% as growth in the first quarter was offset by declines in the second quarter as previously discussed.

Gross Profit

	26-weeks ended June 27, 2009					26-weeks ended June 28, 2008					Quarter over Quarter
	Gross Profit		% of Revenues			Gross Profit		% of Revenues			$ Change			% Change
Outdoor/Fitness	$	121,639		64.7	%	$	105,347		55.6	%	$	16,292			15.5	%
Marine		58,658		59.7	%		72,583		57.1	%		(13,925	)		-19.2	%
Automotive/Mobile		279,258		40.1	%		439,614		40.6	%		(160,356	)		-36.5	%
Aviation		88,054		71.4	%		119,699		68.4	%		(31,645	)		-26.4	%
Total	$	547,609		49.5	%	$	737,243		46.8	%	$	(189,634	)		-25.7	%

Gross profit dollars in the first half of 2009 fell 25.7% while gross profit margin percentage increased 270 basis points over the same period of the previous year. First half gross profit margins increased in all segments excluding automotive/mobile, when compared to the same period in 2007.

The automotive/mobile segment gross profit margin percentage decline of 50 basis points was driven by price declines largely offset by material cost reductions and foreign currency fluctuations as the Company benefited from sales transacted in foreign currencies. The automotive/mobile segment is by nature a lower-margin business and the Company continues to see the impacts expected on gross margin due to falling prices and a product mix shift toward lower end PNDs. Gross profit margin percentage for outdoor/fitness, marine and aviation increased compared to the first half of 2008 due to stable or increased pricing and decreases in per unit costs driven by product mix and material cost reductions.

Advertising Expense

	26-weeks ended June 27, 2009					26-weeks ended June 28, 2008					Quarter over Quarter
	Advertising		% of Revenues			Advertising		% of Revenues			$ Change			% Change
Outdoor/Fitness	$	8,830		4.7	%	$	12,504		6.6	%	$	(3,674	)		-29.4	%
Marine		4,999		5.1	%		9,704		7.6	%		(4,705	)		-48.5	%
Automotive/Mobile		41,182		5.9	%		71,364		6.6	%		(30,182	)		-42.3	%
Aviation		2,237		1.8	%		2,884		1.6	%		(647	)		-22.4	%
Total	$	57,248		5.2	%	$	96,456		6.1	%	$	(39,208	)		-40.6	%

Advertising expense decreased both as a percentage of sales and in absolute dollars when compared with the year-ago period. As a percent of sales, advertising expenses declined to 5.2% in the first half of 2009 compared to 6.1% in first half of 2008. The decrease was a result of actions taken by the Company to reduce costs as the macroeconomic conditions impacted sales across our segments and around the world.

Selling, General and Administrative Expenses

	26-weeks ended June 27, 2009					26-weeks ended June 28, 2008
	Selling, General &					Selling, General &					Quarter over Quarter
	Admin. Expenses		% of Revenues			Admin. Expenses		% of Revenues			$ Change			% Change
Outdoor/Fitness	$	22,232		11.8	%	$	15,258		8.0	%	$	6,974			45.7	%
Marine		11,178		11.4	%		10,783		8.5	%		395			3.7	%
Automotive/Mobile		77,051		11.1	%		88,815		8.2	%		(11,764	)		-13.2	%
Aviation		11,502		9.3	%		11,541		6.6	%		(39	)		-0.3	%
Total	$	121,963		11.0	%	$	126,397		8.0	%	$	(4,434	)		-3.5	%

Selling, general and administrative expense decreased in absolute dollars while increasing as a percentage of sales compared to the year-ago period as costs throughout the Company were reduced but not as rapidly as the revenue declines. Cost reductions related to headcount reductions primarily in operations and reduced bad debt expense in the current year. The increased expense for the outdoor/fitness segment is driven by the allocation of costs based on revenues. As outdoor/fitness revenues have increased as a percentage of revenues, additional selling, general and administrative expenses are shifted to the segment. As a percent of sales, selling, general and administrative expenses increased from 8.0% of sales in the first half of 2008 to 11.0% of sales in the first half of 2009, as revenues declined.

Research and Development Expense

	26-weeks ended June 27, 2009					26-weeks ended June 28, 2008
	Research &					Research &					Quarter over Quarter
	Development		% of Revenues			Development		% of Revenues			$ Change			% Change
Outdoor/Fitness	$	11,657		6.2	%	$	12,829		6.8	%	$	(1,172	)		-9.1	%
Marine		10,567		10.8	%		10,192		8.0	%		375			3.7	%
Automotive/Mobile		49,707		7.1	%		42,604		3.9	%		7,103			16.7	%
Aviation		39,356		31.9	%		37,529		21.5	%		1,827			4.9	%
Total	$	111,287		10.1	%	$	103,154		6.5	%	$	8,133			7.9	%

The 7.9% increase in research and development expense dollars was due to ongoing development activities for new products, the addition of 200 new engineering personnel to our staff during the period, and an increase in engineering program costs during the first half of 2009 as a result of our continued emphasis on product innovation. Research and development costs increased $8.1 million when compared with the year-ago period and increased 360 basis points as a percent of revenue as research and development grew while revenues declined.

Operating Income

	26-weeks ended June 27, 2009					26-weeks ended June 28, 2008					Quarter over Quarter
	Operating Income		% of Revenues			Operating Income		% of Revenues			$ Change			% Change
Outdoor/Fitness	$	78,920		42.0	%	$	64,756		34.1	%	$	14,164			21.9	%
Marine		31,914		32.5	%		41,904		32.9	%		(9,990	)		-23.8	%
Automotive/Mobile		111,318		16.0	%		236,831		21.9	%		(125,513	)		-53.0	%
Aviation		34,959		28.4	%		67,745		38.7	%		(32,786	)		-48.4	%
Total	$	257,111		23.3	%	$	411,236		26.1	%	$	(154,125	)		-37.5	%

Operating income was down 280 basis points as a percent of revenue when compared to the year-ago period as the revenue declines and continued growth in research and development expense associated with ongoing development activities were only partially offset by gross margin improvements and declining in advertising expense.

Other Income (Expense)

	26-weeks ended			26-weeks ended
	June 27, 2009			June 28, 2008
Interest Income	$	10,286		$	18,127
Foreign Currency Exchange	$	(7,274	)		17,562
Gain on sale of equity securities		-			50,949
Other	$	(359	)		732
Total	$	2,653		$	87,370

The average taxable equivalent interest rate return on invested cash during the first half of 2009 was 1.6% compared to 3.4% during the same period of 2008. The decrease in interest income is attributable to decreasing interest rates.

The majority of the $7.3 million currency loss in the first half of 2009 was due to the weakening of the U.S. Dollar compared to the British Pound Sterling and the Taiwan Dollar. During the first half of 2009, the U.S. Dollar weakened 11.7% compared to the British Pound Sterling, resulting in a loss of $0.7 million. A loss of $5.3 million resulted due to the U.S. Dollar weakening 0.5% against the Taiwan Dollar. The remaining net currency loss of $1.3 million related to other currencies and timing of transactions.

The majority of the $17.6 million currency gain in the first half of 2008 was related to the tender of our Tele Atlas N.V. shares. This transaction generated a realized gain of $21.5 million due to the strengthening of the Euro between the date of purchase of the shares in October 2007 to the dates of tender in February, March, and June 2008. The remainder of the $3.9 million currency loss in the first half of 2008 was primarily due to the weakening of the U.S. Dollar compared to the Taiwan Dollar. During the first half of fiscal 2008 the Taiwan Dollar exchange rate increased 6.8% in comparison to the USD, resulting in a $38.2 million loss. Offsetting this impact, the Euro has strengthened 7.1% relative to the U.S. Dollar during the first half which resulted in a $34.0 million gain. The relative strength of the Taiwan Dollar and Euro have offsetting impacts due to the use of the Taiwan Dollar for manufacturing costs while the Euro transactions relate to revenue. Other net currency gains and the timing of transactions created the remaining gain of $0.3 million.

The gain on sale of equity securities of $50.9 million in the first half of 2008 was generated from the sale of our equity interest in Tele Atlas N.V.

Income Tax Provision

Our earnings before taxes decreased 47.9% when compared to the same period in 2008, and our income tax expense decreased similarly by $45.4 million, to $49.4 million, for the 26-week period ended June 27, 2009, from $94.7 million for the 26-week period ended June 28, 2008. The effective tax rate was 19.0% in the first half of 2009 and the first half of 2008.

Net Income

As a result of the above, net income decreased 47.9% for the 26-week period ended June 27, 2009 to $210.4 million compared to $403.9 million for the 26-week period ended June 28, 2008.

Liquidity and Capital Resources

Net cash generated by operating activities was $555.7 million for the 26-week period ended June 27, 2009 compared to $280.2 million for the 26-week period ended June 28, 2008. We experienced an $89.0 million year-to-date decrease in net inventories in this 26-week period of 2009. We were able to reduce inventory levels while still carrying sufficient inventory levels of finished goods and key components so that potential supplier shortages have as minimal an impact as possible on our ability to deliver our finished products. Accounts receivable decreased $233.2 million, net of bad debts, during the first half of 2009 due to collections following the seasonally strong fourth quarter of 2008.

Cash flow used in investing activities during the 26-week period ending June 27, 2009 was $300.2 million. Cash flow used in investing activities principally related to $23.3 million in capital expenditures primarily related to business operation and maintenance activities, the net purchase of $273.3 million of fixed income securities associated with the investment of our on-hand cash balances, and the purchase of intangible assets for $3.5 million. It is management’s goal to invest the on-hand cash consistent with the Company’s investment policy, which has been approved by the Board of Directors. The investment policy’s primary purpose is to preserve capital, maintain an acceptable degree of liquidity, and maximize yield within the constraint of maximum safety. The average interest rate return on cash and investments during the second quarter of 2009 was 1.6%

Net cash provided by financing activities during the period was $2.2 million resulting from $4.1 million from the issuance of common stock related to our Company stock plans and stock based compensation tax benefits offset by the use of $1.9 million for stock repurchased under our stock repurchase plan.

We currently use cash flow from operations to fund our capital expenditures and to support our working capital requirements. We expect that future cash requirements will principally be for capital expenditures, working capital requirements, repurchase of shares, and payment of dividends declared.

We believe that our existing cash balances and cash flow from operations will be sufficient to meet our projected capital expenditures, working capital, repurchase of shares, and other cash requirements at least through the end of fiscal 2009.

Contractual Obligations and Commercial Commitments

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Sensitivity

We have market risk primarily in connection with the pricing of our products and services and the purchase of raw materials. Product pricing and raw material costs are both significantly influenced by semiconductor market conditions. Historically, during cyclical economic downturns, we have been able to offset pricing declines for our products through a combination of improved product mix and success in obtaining price reductions in raw material costs. In the current quarter, we were not able to offset the steep decline in sales with cost savings resulting in a significant decrease in gross profit and operating income.

Inflation

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could adversely affect our business, financial condition and results of operations.

Foreign Currency Exchange Rate Risk

The operation of the Company’s subsidiaries in international markets results in exposure to movements in currency exchange rates. The potential of volatile foreign exchange rate fluctuations in the future could have a significant effect on our results of operations. In accordance with Statement of Financial Accounting Standards (SFAS) No. 52, Foreign Currency Translation, the financial statements of all Company entities with functional currencies that are not United States dollars (USD) are translated for consolidation purposes into USD, the functional currency of Garmin Ltd. and Garmin International, Inc. Sales, costs, and expenses are translated at rates prevailing during the reporting periods and at end-of-period rates for all assets and liabilities. The effect of this translation is recorded in a separate component of stockholders’ equity and have been included in accumulated other comprehensive gain/(loss) in the accompanying condensed consolidated balance sheets.

Foreign currency gains and losses for the Company are primarily tied to movements by the Taiwan Dollar (TD), the Euro, and the British Pound Sterling. The U.S. Dollar (USD) remains the functional currency of Garmin (Europe) Ltd. The Euro is the functional currency of all European subsidiaries excluding Garmin Danmark and Garmin Sweden. As these entities have grown, Euro currency moves generated material gains and losses. Additionally, Euro-based inter-company transactions in Garmin Ltd. can also generate currency gains and losses. The Canadian Dollar and Danish Krone, and Swedish Krona are the functional currency of Dynastream Innovations, Inc., Garmin Danmark, and Garmin Sweden respectively; due to these entities’ relative size, currency moves are not expected to have a material impact on the Company’s financial statements.

Interest Rate Risk

As of June 27, 2009, we are exposed to interest rate risk in connection with our investments in marketable securities. As interest rates change, the unrealized gains and losses associated with those securities will fluctuate accordingly. As we have no outstanding long term debt we have no meaningful debt-related interest rate risk.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. The Company maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. As of June 27, 2009, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of June 27, 2009 that our disclosure controls and procedures were effective such that the information relating to the Company, required to be disclosed in our Securities and Exchange Commission ("SEC") reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company's management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. There has been no change in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended June 27, 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II - Other Information

Item 1. Legal Proceedings

Encyclopaedia Britannica, Inc. v. Alpine Electronics of America, Inc., Alpine Electronics, Inc., Denso Corporation, Toyota Motor Sales, U.S.A., Inc., American Honda Motor Co., Inc., and Garmin International, Inc.

On May 16, 2005, Encyclopaedia Britannica, Inc. (“Encyclopaedia Britannica”) filed suit in the United States District Court for the Western District of Texas, Austin Division, against Garmin International, Inc. and five other unrelated companies, alleging infringement of U.S. Patent No. 5,241,671 (“the ’671 patent”). On December 30, 2005, Garmin International filed a Motion for Summary Judgment for Claim Invalidity Based on Indefiniteness. On September 30, 2008, the court issued a Memorandum Opinion and Order granting Garmin International’s Motion for Summary Judgment for Claim Invalidity Based on Indefiniteness with respect to the ’671 patent. On October 8, 2008, the court issued an Amended Final Judgment ordering that Encyclopaedia Britannica take nothing from its action against Garmin International with respect to the ’671 patent and closed that case. On November 12, 2008, Encyclopaedia Britannica filed a Notice of Appeal to the Federal Circuit Court of Appeals. On March 3, 2009, Encyclopaedia Britannica filed a Corrected Brief of Appellant. On June 1, 2009, Garmin International filed its responsive brief. On July 20, Encyclopaedia Britannica filed a reply brief. Garmin International believes the Federal Circuit will affirm the district court’s judgment.

On May 23, 2006, Encyclopaedia Britannica filed an amended complaint claiming that Garmin International and the other defendants also infringe U.S. Patent No. 7,051,018 (“the ‘018 patent”), a continuation patent of the ‘671 patent, which issued on May 23, 2006. On July 25, 2006, Encyclopaedia Britannica filed a new complaint claiming that Garmin International and the other defendants also infringe U.S. Patent No. 7,082,437 (“the ‘437 patent”), a continuation patent of the ‘671 patent, which issued on July 25, 2006. Encyclopaedia Britannica has asserted the ’018 and ’437 patents against other parties in Encyclopaedia Britannica v. Magellan Navigation, Inc., et al., Case No. 07‐CA‐787 (LY)(W.D. Tex). On February 6, 2009, the court entered a scheduling order enabling all defendants in these cases to file a consolidated Joint Motion for Summary Judgment of Invalidity of the ’018 and ’437 patents and stayed all proceedings pending the court’s ruling on the joint motion for summary judgment. On February 20, 2009, the defendants filed a consolidated Joint Motion for Summary Judgment of Invalidity of the ’018 and ’437 patents. On August 3, 2009, the court issued a Memorandum Opinion and Order granting the defendants’ consolidated Joint Motion for Summary Judgment of Invalidity of the ’018 and ’437 patents and holding that these patents are invalid.

SP Technologies, LLC v. Garmin Ltd., Garmin International, Inc., TomTom, Inc., and Magellan Navigation,Inc.

On June 5, 2008, SP Technologies, LLC filed suit in the United States District Court for the Northern District of Illinois against Garmin Ltd. and Garmin International, Inc. alleging infringement of U.S. Patent No. 6,784,873 (“the ’873 patent”). On July 7, 2008, SP Technologies, LLC filed an amended complaint removing all claims against Garmin Ltd. and alleging infringement of the ’873 patent against additional defendants TomTom, Inc. and Magellan Navigation, Inc. Garmin believes that it should not be found liable for infringement of the ’873 patent and additionally that the ’873 patent is invalid. On August 18, 2008, Garmin filed its answer to the amended complaint along with a motion for dismissal of SP Technologies, LLC’s claims of willful and inducement infringement of the ’873 patent. On October 16, 2008, the court granted Garmin’s motion for partial dismissal, striking the willful and inducement infringement allegations from the amended complaint. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity or financial position, Garmin believes that the claims are without merit and intends to vigorously defend this lawsuit.

On January 7, 2009, Garmin filed an Amended Answer and Counterclaims asserting the ’873 patent is not infringed, is invalid, and that the plaintiff committed inequitable conduct resulting in unenforceability of the ’873 patent. On February 2, 2009, codefendant TomTom, Inc. filed a Motion for Summary Judgment of Unenforceability of the ’873 22 Patent Due to Inequitable Conduct. On April 10, 2009, the Court held a claim construction hearing and the parties await the Court’s ruling on claim construction and summary judgment.

Scott C. Harris and Memory Control Enterprise, LLC v. Dash Navigation, Inc., Garmin International, Inc., Lowrance Electronics, Inc., Magellan Navigation, Inc., Mio Technology USA, Navigon Inc., Netropa Corporation, and Sony Electronics, Inc.

On September 4, 2008, Scott C. Harris and Memory Control Enterprise, LLC filed suit in the United States District Court for the Northern District of Illinois against Garmin International, Inc., along with Dash Navigation, Inc., Lowrance Electronics, Inc., Magellan Navigation, Inc., Mio Technology USA, Navigon Inc., Netropa Corporation, and Sony Electronics, Inc. The complaint against Garmin International, Inc. alleges infringement of U.S. Patent No. 6,892,136 (“the ’136 patent”). On July 16, 2009, the parties entered into a confidential settlement agreement and on July 22, 2009, Scott C. Harris and Memory Control Enterprise, LLC moved the court to dismiss its claims against Garmin International with prejudice. The settlement was not material to Garmin.

Traffic Information, LLC v. Sony Electronics Inc., Asus Computer International, Best Buy Stores, L.P.,

Kenwood U.S.A. Corporation, Nextar, Inc., American Suzuki Motor Corporation, TGSP, L.P. d/b/a Empire

Suzuki, and Garmin International, Inc.

On July 1, 2009, Traffic Information, LLC filed suit in the United States District Court for the Eastern District of Texas against Garmin International, Inc. along with Sony Electronics Inc., Asus Computer International, Best Buy Stores, L.P., Kenwood U.S.A. Corporation, Nextar, Inc., American Suzuki Motor Corporation, and TGSP, L.P. d/b/a Empire Suzuki. The complaint against Garmin International, Inc. alleges infringement of U.S. Patent No. 6,785,606 (“the ’606 patent”). Garmin International, Inc. believes the ’606 patent is invalid and not infringed. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity or financial position, Garmin International, Inc. believes that the claims are without merit and intends to vigorously defend this action.

From time to time Garmin is involved in other legal actions arising in the ordinary course of our business. We believe that the ultimate outcome of these actions will not have a material adverse effect on our business, financial condition and results of operations.

Item 1A. Risk Factors

There are many risks and uncertainties that can affect our future business, financial performance or share price. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 27, 2008. There have been no material changes during the 13-week and 26-week period ended June 27, 2009 in the risks described in our Annual Report on Form 10-K. These risks, however, are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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

Items (a) and (b) are not applicable.

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

The Company held its Annual General Meeting of Shareholders on June 5, 2009. Proxies for the meeting were solicited pursuant to Regulation 14A. There was no solicitation in opposition to the Board of Directors’ nominees for election as directors as listed in the Proxy Statement and all such nominees were elected. Listed below is each matter voted on at the Company’s Annual General Meeting. All such matters were approved. A total of 185,272,255 common shares or approximately 93% of the common shares outstanding on the record date, were present in person or by proxy at the Annual General Meeting. These shares were voted as follows:

Election of Two Directors of the Company:

Nominee	For	Withheld

Min H. Kao	183,293,617	1,978,638
Charles W. Peffer	183,325,315	1,946,940

The terms of office of Directors Min H. Kao and Charles W. Peffer will continue until the Annual General Meeting in 2012. The terms of office of Directors Gene M. Betts and Thomas A. McDonnell will continue until the Annual General Meeting of Shareholders in 2010. The terms of office of Directors Donald H. Eller and Clifton A. Pemble will continue until the Annual General Meeting of Shareholders in 2011.

Ratification of the Appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the 2009 Fiscal Year:

For		Against		Abstain
184,572,930		534,445		164,880

Approval of Amendment to the Garmin Ltd. 2005 Equity Incentive Plan

For		Against		Abstain		Not Voted
143,887,562		2,117,854		179,833		39,087,006

Approval of Amendment to the Garmin Ltd. 2000 Non-Employee Directors’ Option Plan

For		Against		Abstain		Not Voted
143,498,920		2,480,622		205,707		39,087,006

Item 5. Other Information

Not applicable

Item 6. Exhibits

Exhibit 10.1		Best Buy Vendor Program Agreement and Addendum thereto dated March 30, 2009.

Exhibit 31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).

Exhibit 31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).

Exhibit 32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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

	GARMIN LTD.

	By		/s/ Kevin Rauckman
			Kevin Rauckman
			Chief Financial Officer
			(Principal Financial Officer and
			Principal Accounting Officer)

Dated: August 5, 2009

INDEX TO EXHIBITS

Exhibit No.		Description

Exhibit 10.1*		Best Buy Vendor Program Agreement and Addendum thereto dated March 30, 2009.

Exhibit 31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).

Exhibit 31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).

Exhibit 32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Portions of Exhibit 10.1 have been omitted pursuant to a request for confidential treatment.