# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

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

For	the	fiscal	year	ended	December	30,	2006

# 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)

Cayman	Islands

(State	or	other	jurisdiction

of	incorporation	or	organization)

103	South	Church	Street

George	Town,	Grand	Cayman,	Cayman	Islands

(Address	of	principal	executive	offices)

(I.R.S.	Employer	Identification	No.)

(Zip	Code)

Registrant's	telephone	number,	including	area	code:	(345)	946-5203

Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

# Common	Shares,	$0.005	Per	Share	Par	Value

(Title	of	each	class)

# NASDAQ	Global	Select	Market

(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	[Ö]	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	[Ö	]

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	[Ö]	NO	[	]

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	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,	or	a	non-accelerated	filer.	See	definition	of	"accelerated	filer	and	large accelerated	filer"	in	Rule	12b-2	of	the	Act.

Large	Accelerated	Filer	[Ö	]	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).

Aggregate	market	value	of	the	common	shares	held	by	non-affiliates	of	the	registrant	as	of	June	30,	2006	(based	on	the	closing	price	of	the	registrant's	common shares	on	the	Nasdaq	Stock	Market	for	that	date)	was	approximately	$7,260,517,893.

Number	of	shares	outstanding	of	the	registrant's	common	shares	as	of	February	23,	2007:

# Documents	incorporated	by	reference:

Portions	of	the	following	document	are	incorporated	herein	by	reference	into	Part	III	of	the	Form	10-K	as	indicated:

# Document

Company's	Definitive	Proxy	Statement	for	the	2007	Annual	Meeting	of	Shareholders	which	will	be	filed	no	later than	120	days	after	December	30,	2006 Part	III

# Table	of	Contents

# Part	II

# CAUTIONARY	STATEMENT	WITH	RESPECT	TO	FORWARD-LOOKING	COMMENTS

The	discussions	set	forth	in	this	Annual	Report	on	Form	10-K	contain	statements	concerning	potential	future	events.	Such	forward-looking	statements	are based	upon	assumptions	by	 the	Company's	management,	as	of	 the	date	of	 this	Annual	Report,	 including	assumptions	about	risks	and	uncertainties	faced	by	 the Company.	In	addition,	management	may	make	forward-looking	statements	orally	or	in	other	writings,	including,	but	not	limited	to,	in	press	releases,	in	the	annual	report to	shareholders	and	in	the	Company's	other	filings	with	the	Securities	and	Exchange	Commission.	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.	Forward-looking	statements	include	any	discussion	of	the	trends	and other	factors	that	drive	our	business	and	future	results	in	"Item	7.	Management's	Discussion	and	Analysis	of	Financial	Conditions	and	Results	of	Operation."	Readers are	cautioned	not	to	place	undue	reliance	on	these	forward-looking	statements,	which	speak	only	as	of	their	date.	If	any	of	management's	assumptions	prove	incorrect	or should	 unanticipated	circumstances	 arise,	 the	 Company's	 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	under	Item	1A	"Risk	Factors". Readers	are	strongly	encouraged	to	consider	those	factors	when	evaluating	any	forward-looking	statements	concerning	the	Company.	The	Company	does	not	undertake to	update	any	forward-looking	statements	in	this	Annual	Report	to	reflect	future	events	or	developments.

# Part	I

# Item	1.	Business

This	discussion	 of	 the	 business	 of	 Garmin	 Ltd.	 ("Garmin"	 or	 the	 "Company")	 should	b e	read	 in	 conjunction	 with,	 and	 is	 qualified	 by	 reference	 to, "Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations"	under	Item	7	herein	and	the	information	set	forth	in	response	to	Item	101	of Regulation	S-K	in	such	Item	7	is	incorporated	herein	by	reference	in	partial	response	to	this	Item	1.	Garmin	has	four	business	segments:	Marine,	Automotive/Mobile, Outdoor/Fitness,	 and	 Aviation.	 The	 segment	 and	 geographic	information	 included	 in	 Item	 8,	 "Financial	 Statements	 and	 Supplementary	 Data,"	 under	 Note	 8	 is incorporated	herein	by	reference	in	partial	response	to	this	Item	1.

Garmin	was	incorporated	in	the	Cayman	Islands	on	July	24,	2000	as	a	holding	company	for	Garmin	Corporation,	a	Taiwan	corporation,	in	order	to	facilitate	a public	offering	of	Garmin	shares	in	the	United	States.	Garmin	owns,	directly	or	indirectly,	all	of	the	operating	companies	in	the	Garmin	group.

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

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

# Company	Overview

Garmin	is	a	leading,	worldwide	provider	of	navigation,	communications	and	information	devices,	most	of	which	are	enabled	by	Global	Positioning	System ("GPS")	technology.	Garmin	designs,	develops,	manufactures	and	markets	a	diverse	family	of	hand-held,	portable	and	fixed-mount	GPS-enabled	products	and	other navigation,	communications	and	information	products	for	the	automotive/mobile,	outdoor/fitness,	marine,	and	general	aviation	markets.

# Overview	of	the	Global	Positioning	System

The	Global	Positioning	System	is	a	worldwide	navigation	system	which	enables	the	precise	determination	of	geographic	location	using	established	satellite technology.	The	system	consists	of	a	constellation	of	orbiting	satellites.	The	satellites	and	their	ground	control	and	monitoring	stations	are	maintained	and	operated	by the	United	States	Department	of	Defense,	which	maintains	an	ongoing	satellite	replenishment	program	to	ensure	continuous	global	system	coverage.	Access	to	the system	is	provided	free	of	charge	by	the	U.S.	government.

Prior	to	May	2000,	the	U.S.	Department	of	Defense	intentionally	degraded	the	accuracy	of	civilian	GPS	signals	in	a	process	known	as	Selective	Availability (''SA'')	 for	 national	security	purposes.	SA	variably	degraded	GPS	position	accuracy	to	a	radius	of	100	meters.	On	May	2,	2000,	the	U.S.	Department	of	Defense discontinued	SA.	In	a	presidential	policy	statement	issued	in	December	2004,	the	Bush	administration	indicated	that	the	U.S.	does	not	intend	to	implement	SA	again	and is	committed	to	preventing	hostile	use	of	GPS	through	regional	denial	of	service,	minimizing	the	impact	to	peaceful	users.	With	SA	removed,	a	GPS	receiver	can calculate	its	position	to	an	accuracy	of	approximately	10	meters	or	less,	enhancing	the	utility	of	GPS	for	most	applications.

The	accuracy	and	utility	of	GPS	can	be	enhanced	through	augmentation	techniques	which	compute	any	remaining	errors	in	the	signal	and	broadcast	these corrections	to	a	GPS	device.	The	Federal	Aviation	Administration	("FAA")	has	developed	a	Wide	Area	Augmentation	System	(''WAAS'')	comprising	ground	reference stations	and	additional	satellites	that	improve	the	accuracy	of	GPS	positioning	available	in	the	United	States	and	portions	of	Canada	and	Mexico	to	approximately	3 meters.	WAAS	supports	the	use	of	GPS	as	the	primary	means	of	enroute,	terminal	and	approach	navigation	for	aviation	in	the	United	States.	The	increased	accuracy offered	by	WAAS	also	enhances	the	utility	of	WAAS-enabled	GPS	receivers	 for	consumer	applications.	The	FAA	announced	on	July	11,	2003	that	the	WAAS	 system had	achieved	initial	operating	capability	and	that	the	system	was	available	for	instrument	flight	use	with	appropriately	certified	avionics	equipment.	Since	that	time,	the FAA	has	installed	additional	ground	reference	stations	and	has	launched	additional	WAAS	satellites.

# Recent	Developments	in	the	Company's	Business

Since	the	inception	of	its	business,	Garmin	has	delivered	over	19	million	products,	which	includes	the	delivery	of	over	5.4	million	products	during	2006.

# Automotive/Mobile	Product	Introductions

Garmin	launched	many	new	products	in	2006.	Among	these	were	new	versions	of	Garmin's	popular	nüvi™	Personal	Travel	Assistant™	product	line.	The	nüvi family	was	expanded	in	2006	to	include	the	nüvi	360	and	the	nüvi	660.	The	nüvi	360	adds	Bluetooth™	wireless	capability	to	the	nüvi's	already	full	feature	set	of	a	high- sensitivity	GPS	receiver,	language	translator,	MP3	player,	audio	book	player,	currency	and	measurement	converter,	world	clock	and	digital	photo	organizer.	The	nüvi 660	incorporates	a	wider	and	brighter	touchscreen,	an	integrated	traffic	receiver	and	an	integrated	FM	transmitter.

Garmin	also	introduced	several	new	versions	of	its	StreetPilot®	line	 of	personal	navigation	devices	(PNDs)	 in	2006.	The	StreetPilot	c-Series™	line	 was expanded	with	the	c500	series	(c510,	c530,	and	c550	models),	which	built	upon	the	success	of	the	c300	series	by	adding	several	new	features,	including	Bluetooth™ wireless	technology,	an	integrated	traffic-detection	receiver,	a	brighter	display,	a	high-sensitivity	GPS	receiver,	an	MP3	player,	and	optional	(purchased	separately) Garmin	Travel	Guide™	functionality	-	giving	users	reviews	and	recommendations	for	restaurants,	hotels,	shopping,	nightlife,	sporting	events,	and	tourist	attractions. The	StreetPilot	2700	series	was	also	updated	with	the	introduction	of	the	StreetPilot	2820,	a	premium	navigation	device	which	adds	Bluetooth™	wireless	connectivity and	other	upgrades	to	the	features	of	the	2700	series.	Garmin	also	introduced	the	zūmo™	in	2006,	a	navigator	designed	specifically	for	the	motorcycle	market	with	such features	as	left-handed	controls,	a	high-bright	display,	Bluetooth™	"hands-free-to-helmet"	wireless	technology	capability,	and	a	rugged	locking	mount.

Garmin	continued	its	expansion	in	the	rental	car	market	in	2006	by	announcing	agreements	to	supply	GPS	navigation	devices	to	Enterprise	Rent-A-Car,	Avis Rent	A	Car	and	Budget	Rent	A	Car.

Garmin	also	 expanded	 its	 Garmin	 Mobile™	 service	 and	 family	 of	 products	 in	 2006.	Building	 upon	 its	 September	 2005	 launch	 of	 Garmin	 Mobile	 --	 a subscription-based	navigation	service	for	select	mobile	phones	and	providers	--	Garmin	added	the	availability	of	new	dynamic	content	for	Garmin	Mobile	(including	fuel prices,	weather	conditions	and	forecasts,	and	traffic	information)	and	later	announced	that	Garmin	Mobile	would	be	available	on	select	BlackBerry	devices,	in	addition to	certain	Sprint	and	Nextel	handsets.	Garmin	also	introduced	Garmin	Mobile	20,	an	automotive	navigation	system	that	delivers	Garmin's	voice-prompted,	turn-by-turn directions	using	Bluetooth	wireless	technology	on	Nokia,	Windows	Mobile	and	Treo	650	Smartphones,	and	Garmin	Mobile	10,	a	product	that	turns	Bluetooth	enabled devices	such	as	laptops,	smartphones,	Pocket	PCs	(personal	computers),	and	PDAs	(personal	data	assistants)	into	GPS	navigators.

# Outdoor/Fitness	Product	Introductions

In	the	category	of	GPS-enabled	fitness	products,	Garmin	began	selling	its	next	generation	Forerunner®	products	in	2006:	the	Forerunner	205	and	Forerunner 305.	The	wrist-worn	Forerunner	205	and	305	fitness	products	were	redesigned	from	the	first	generation	Forerunners	to	maximize	GPS	satellite	reception	and	to	provide a	sleeker	design.	To	help	promote	the	release	of	the	new	Forerunner	products,	Garmin	helped	sponsor	more	than	a	dozen	marathons	and	cycling	events	in	2006	and	early 2007.

# Marine	Product	Introductions

Garmin	introduced	several	new	marine	radar	products	 in	2006	and,	 in	November	2006,	we	introduced	a	new	and	completely	redesigned	 line	of	marine chartplotters,	sonar,	and	combination	units	for	the	2007	boating	season.	These	new	marine	products	offer	a	new	"flat	screen"	design,	a	new	user	interface,	satellite	photo- generated	cartography,	and	other	new	features.

# Aviation	Product	Introductions

Garmin's	G1000	integrated	avionics	suite	received	Federal	Aviation	Administration	("FAA") certification	in	September	2006	for	incorporation	into	Cessna's Citation	Mustang	very	light	jet.

In	November	2006,	Garmin's	GNS	400/500	panel-mount	avionics	products	received	the	FAA's	TSO	C146a	Gamma-3	certification,	which	enables	pilots	to	fly Lateral-Precision	with	Vertical	(LPV)	guidance	approaches	and	receive	GPS	navigation	via	the	Wide	Area	Augmentation	System	(WAAS).

Garmin	also	introduced	the	GPSMAP	496	aviation	handheld	product	as	an	upgrade	to	the	GPSMAP	396.

# Expansion	of	Facilities

In	October	2006,	Garmin's	United	Kingdom	subsidiary	acquired	a	building	in	Totton,	Southampton,	England	to	serve	as	the	new	headquarters	for	Garmin (Europe)	 Ltd.,	Garmin's	United	Kingdom	subsidiary.	The	facility	contains	building	space	of	approximately	155,000	sq.	ft,	including	more	than	129,000	sq.	ft	of warehouse	space,	which	will	serve	as	the	European	headquarters	for	distribution,	marketing,	and	product	support.

In	February	2006,	Garmin's	Taiwan	subsidiary	acquired	a	223,469	sq.	ft.	facility	in	Jhongli,	Taiwan,	which	now	serves	as	our	second	manufacturing	facility	for consumer	products.

# 	Chicago	Retail	Store

In	November	2006,	Garmin	opened	its	first	retail	store	which	is	located	in	Chicago's	North	Michigan	Avenue	shopping	district.	The	store	is	intended	to	 serve as	a	showcase	for	Garmin's	broad	range	of	products.

# Acquisitions

In	November	2006,	Garmin	acquired	Dynastream	Innovations	Inc.,	a	Canadian	company	specializing	in	the	field	of	personal	monitoring	technology	-	such	as foot	pods	and	heart	rate	monitors	for	sports	and	fitness	products	-	and	a	provider	of	wireless	connectivity	solutions	for	a	wide	range	of	applications.	Dynastream's products	address	the	needs	of	a	broad	spectrum	of	fitness	consumers	and	are	expected	to	complement	Garmin's	fitness	products.

# Two-For-One	Stock	Split

Garmin's	shareholders	approved	a	two-for-one	stock	split	on	July	21,	2006,	which	was	effective	on	August	15,	2006.

# Products

Garmin	has	achieved	a	leading	market	position	and	a	history	of	consistent	growth	in	revenues	and	profits	by	offering	ergonomically	designed,	user-friendly products	with	innovative	features	and	designs	covering	a	broad	range	of	applications	and	price	points.	Garmin's	target	markets	are	currently	broken	down	into	four	main segments	-	automotive/mobile,	outdoor/fitness,	marine	and	aviation.

# Automotive/Mobile

Garmin	currently	offers	a	broad	range	of	automotive	navigation	products,	as	well	as	a	variety	of	products	and	applications	designed	for	the	mobile	GPS	market. Garmin	believes	that	its	consumer	products	are	known	for	their	value,	high	performance,	innovation	and	ergonomics.	The	table	below	includes	a	sampling	of	the automotive	and	mobile	products	that	Garmin	currently	offers	to	consumers	around	the	world.

nüvi (8	models) The	nüvi	is	an	all-in-one	Personal	Travel	Assistant™	that	combines	a	full-featured	GPS	navigator,	optional	language	translator, MP3	player,	audio	book	player,	currency	and	measurement	converter,	world	clock	and	digital	photo	organizer.	Users	can	also choose	to	purchase	optional	software	enabling	the	nüvi	to	be	used	as	a	digital	coupon	book	(Garmin	SaversGuideTM)	or	as	a travel	assistant	that	provides	reviews	and	recommendations	for	restaurants,	hotels,	shopping,	night	life,	sporting	events,	tourist attractions,	and	more	(Travel	Guide™).	The	nüvi	600	series	offers	the	user	a	wider	and	brighter	screen	and	an	integrated	FM traffic	receiver,	as	well	as	other	features,	including	the	option	for	MSN	Direct	content	on	the	nüvi	680	(announced	in	January 2007).	The	nüvi	comes	in	separate	North	American	and	European	versions,	as	well	as	a	combined	version	(the	nüvi	670	- announced	in	January	2007)	that	contains	pre-loaded	street	maps	for	both	continents.	In	fiscal	years	2006,	2005,	and	2004,	the nüvi	class	of	products	represented	approximately	28%,	2%,	and	0%	of	Garmin's	total	consolidated	revenues.

StreetPilot (15	models) The	StreetPilot	i-Series™	(comprised	of	the	i2™,	i3™,	and	i5™)	are	Garmin's	smallest,	most	inexpensive	line	of	automotive navigators,	yet	still	offer	color	screens	(i3	and	i5)	and	voice	prompted,	turn-by-turn	directions	The	StreetPilot	c-300	series (c310,	c320,	c330,	c340,)	features	Garmin's	touch-screen	interface	and	turn-by-turn	voice	directions.	The	StreetPilot	c340	adds the	ability	to	speak	street	names	and	also	to	utilize	real-time	traffic	information	in	select	major	metro	areas	through	Garmin's separate	GTM	10	receiver.	The	StreetPilot	c-500	series	(c510,	c530,	c550	and	c580)	adds	Bluetooth	Wireless	Technology, integrated	traffic	capabilities	(separate	subscription	required),	a	high	bright	display,	and	a	high-sensitivity	GPS	receiver.	The StreetPilot	2720	and	2820	are	full-featured	navigators	in	a	different	form	factor.	The	StreetPilot	7000-Series	(7200	and	7500) are	high-end	automotive	units	that	display	navigation,	entertainment,	traffic,	and	weather	information	on	a	large,	seven-inch touch-screen.	In	fiscal	years	2006,	2005,	and	2004,	the	StreetPilot	class	of	products	represented	approximately	28%,	30%,	and 14%	of	Garmin's	total	consolidated	revenues.

# Outdoor/Fitness

Garmin	currently	offers	GPS-enabled	handheld	products	for	outdoor	activities	and	training	assistants	for	athletic	pursuits.	The	table	below	includes	a	sampling of	the	primary	fitness	and	outdoor	products	that	Garmin	currently	offers	to	consumers.

Rino® (5	models) Handheld	two-way	Family	Radio	Service	(FRS)	and	General	Mobile	Radio	Service	(GMRS)	radios	that	integrate	two-way voice	communications	with	GPS	navigation.	Features	include	patented	"peer-to-peer	position	reporting"	so	you	can	transmit your	 location	 to	 another	 Rino	 radio.	The	 Rino	 120	 has	 an	internal	basemap	 and	 MapSource	 compatibility	 for	 street-level mapping.	The	Rino	130	has	24	MB	of	internal	memory,	built-in	electronic	compass,	barometric	sensor,	and	National	Oceanic and	Atmospheric	Administration	(NOAA)	weather	radio	receiver.	The	Rino	520	has	5	watts	of	transmit	power,	color	display, mini-USB	interface,	and	a	turn-by	turn	automatic	route	calculation	for	use	in	automobiles.	The	Rino	530	has	all	of	the	features of	the	Rino	520,	plus	a	seven-channel	weather	receiver,	electronic	compass,	and	barometric	altimeter.

# Marine

Garmin's	marine	lineup	includes	network	products	and	multifunction	displays,	fixed-mount	GPS/chartplotter	products,	and	sounder	products.	Garmin	revamped its	marine	product	offerings	for	the	2007	boating	season	(announced	in	November	2006).	The	table	below	includes	a	sampling	of	some	of	the	marine	products	that Garmin	currently	offers	to	consumers.

# Marine	Chartplotters	and	Networking	Products

GPSMAP®	5000	series (4	models) Announced	in	February	2007	and	expected	to	be	available	in	June	2007,	these	touch-	screen	multifunction	displays	for	the Garmin	Marine	Network	(a	system	that	combines	GPS,	radar,	XM	WX	Satellite	Weather,	sonar,	and	other	data	offer	ease	of	use and	 video-quality	 resolution	 and	 color.	 The	 5212	 and	5208	 come	pre-loaded	 with	 detailed	 U.S.	 coastal	 charts,	 including Explorer	Charts,	and	 are	 compatible	 with	 Garmin's	 BlueChart®	 g2	 Vision™	 charts	 which	 offer	high-resolution	 satellite imagery,	3D	map	perspective,	aerial	reference	photos,	and	auto	guidance.

GPSMAP®	4000	series/ 4200	series	(4	models) Announced	in	2006	and	expected	to	be	available	in	June	2007,	these	multifunction	displays	for	the	Garmin	Marine	Network	(a system	 that	 combines	 GPS,	radar,	XM	 WX	 Satellite	 Weather,	 sonar,	 and	 other	 data)	 offer	 ease	 of	 use	 and	video-quality resolution	and	color.	The	4212	and	4208	come	pre-loaded	with	detailed	U.S.	coastal	charts,	including	Explorer	Charts,	and	are compatible	with	Garmin's	BlueChart®	g2	Vision™	charts	which	offer	high-resolution	satellite	imagery,	3D	map	perspective, aerial	reference	photos,	and	auto	guidance.

# Other	Marine	Products

Radar (5	models) Garmin	offers	both	radomes	and	open	array	radar	products	with	compatibility	to	any	network-compatible	Garmin	chartplotter so	that	the	chartplotter	can	double	as	the	radar	screen.	The	GMR	18,	21	and	41	models	are	digital	radome	products	in	various sizes	and	power	specifications.	The	GMR	404	and	406	open	array	radar	scanners	provide	even	greater	clarity	and	a	72	nautical mile	range.

# Aviation

Garmin's	panel-mounted	 product	 line	 includes	 GPS-enabled	 navigation,	 VHF	 communications	transmitters/receivers,	 multi-function	 displays,	 receivers, instrument	 landing	system	 (ILS)	 receivers,	 digital	 transponders	 (which	 transmit	 an	 aircraft's	altitude	 and	 its	 flight	 identification	 number	 in	 response	 to	 requests transmitted	by	ground-based	air	traffic	control	radar	systems	or	collision	avoidance	devices	on	other	aircraft),	marker	beacon	receivers	and	audio	panels.

Garmin's	aviation	products	have	won	prestigious	awards	throughout	the	industry	for	 their	innovative	features	and	ease	of	use.	The	GNS	430/530	offers multiple	features	and	capabilities	integrated	into	a	single	product.	This	high	level	of	integration	minimizes	the	use	of	precious	space	in	the	cockpit,	enhances	the	quality and	safety	of	flight	through	the	use	of	modern	designs	and	components	and	reduces	the	cost	of	equipping	an	aircraft	with	modern	electronics.	The	GNS	430	was recognized	 by	Flying	Magazine	as	 the	 Editor's	 Choice	 Product	 of	 the	Year	 for	 1998.	 In	 1994,	 and	 again	 in	 2000,	Garmin	 earned	 recognition	 from	 the	Aircraft Electronics	Association	for	outstanding	contribution	to	the	general	aviation	electronics	industry.	The	GPSMAP	295	won	Aviation	Consumer	Magazine's	Gear	of	the Year	award	for	best	aviation	portable	product	in	2000	and	again	in	2001.	Flying	Magazine's	editors	awarded	the	GPSMAP	396	with	a	2005	Editors'	Choice	Award	for outstanding	achievements.	The	GPSMAP	496,	which	was	introduced	in	2006,	won	the	"2006	Gear	of	the	Year"	award	from	Aviation	Consumer	magazine.	Garmin	was ranked	No.	1	among	aviation	electronics	manufacturers	for	operation,	presentation,	technical	advancement,	information,	construction	and	satisfaction in	Professional Pilot	magazine's	survey	of	its	readers	in	2003,	2004	and	2005	and	was	ranked	No.	2	in	2006.	Also,	Garmin	was	ranked	No.	1	among	avionics	manufacturers	for avionics	product	support	in	Professional	Pilot	magazine's	survey	of	its	readers	in	each	of	the	last	four	years	(2003,	2004,	2005	and	2006).	Aviation	International	News also	ranked	Garmin	No.	1	in	avionics	product	support	in	2006.	Garmin	received	the	Airline	Technology	Achievement	Award	from 	Air	Transport	World	Magazine	in January	 2005	 for	 championing	 the	 development	 of	 Automatic	 Dependent	Surveillance-Broadcast	 (ADS-B)	 technology,	 an	 enabling	 technology	 for	 air	traffic management.

Garmin's	panel-mounted	aviation	products	are	sold	in	both	new	aircraft	and	the	retrofit	market	where	existing	aircraft	are	fitted	with	the	latest	electronics	from Garmin's	broad	product	line.

Garmin	has	also	expanded	its	range	of	avionics	offerings	to	leading	General	Aviation	aircraft	manufacturers	such	as	the	Cessna	Aircraft	Company,	Raytheon Aircraft	Company,	Diamond	Aircraft	Industries,	Mooney	Aircraft	Corporation	and	Columbia	Aircraft	Manufacturing	Corporation	through	the	installation	of	the	G1000 integrated	flight	deck	as	original	equipment	aboard	new	aircraft.	This	system	integrates	attitude,	heading,	air	data,	navigation,	communication,	engine	monitoring,	and other	aircraft	functions	into	a	single	cohesive	system	which	interfaces	with	the	flight	crew	using	a	set	of	large,	bright	TFT	displays.	The	G1000	also	comes	with	an optional	integrated	autopilot	-	the	GFC70.	Garmin	also	has	expanded	its	G1000	sales	to	the	business	jet	segment,	such	as	Cessna	with	its	newly	certified	Citation Mustang	jet	and	Embraer	who	announced	in	November	2005	that	Garmin's	G1000	integrated	flight	deck	had	been	selected	for	Embraer's	new	Phenom	100	(very	light jet)	and	Phenom	300	(light	jet)	programs.

The	table	below	includes	a	sampling	of	some	of	the	aviation	products	currently	offered	by	Garmin:

# Handheld	and	portable	aviation	products:

# Panel-mount	aviation	products:

The	G1000	integrates	navigation,	communication,	attitude,	weather,	terrain,	traffic,	surveillance	and	engine	information	on	large high-resolution	color	displays.	The	G1000	offers	general	aviation	airplane	manufacturers	an	easy-to-install	solution	for	flight displays	and	provides	the	aircraft	owner	the	benefits	of	a	state-of-the-art	avionics	system	which	relies	on	modern	technologies such	as	solid	state	components	and	bright,	sunlight-readable	TFT	displays.

The	GDL	90	is	the	first	airborne	Automatic	Dependent	Surveillance-Broadcast	(ADS-B)	product	certified	by	the	FAA	to	TSO C145A	standards.	The	GDL	90	allows	pilots	in	the	cockpit	and	air	traffic	controllers	on	the	ground	to	"see"	aircraft	traffic	with much	more	precision	than	has	ever	been	possible	before	without	the	costly	infrastructure	of	ground	based	tracking	radar.	The GDL	 90	 relies	 on	 the	 infrastructure	 that	 is	 part	 of	 the	FAA's	 Safe	 Flight	 21	 program.	 This	 program	 is	 currently	 under development	with	implementation	of	the	ground-based	portion	of	the	ADS-B	network	taking	place	along	the	East	Coast	and other	selected	areas	of	the	U.S.A.	Additional	installations	of	the	ADS-B	ground	stations	are	planned.	The	ground	stations	can track	aircraft	movement	and	eventually	are	expected	be	used	to	broadcast	traffic	and	weather	services.	Pilots	equipped	with	the GDL	90	and	operating	within	the	ground	station	coverage	area	will	receive	aircraft	traffic	and	real-time	weather	information free	of	charge.

SL	30	and	SL	40 The	SL30	is	a	compact	VHF	navigation	and	communications	unit	that	combines	a	760-channel	VHF	communications	radio	with 200-channel	glideslope	and	localizer	receivers.	The	SL40	is	a	760-channel	VHF	communications	radio	only.	Both	the	SL30	and SL40	feature	10	watt	communications	transmitters.

# Sales	and	Marketing

Garmin's	consumer	 products	 are	 sold	 through	 a	 worldwide	 network	 of	 approximately	 3,000	independent	 dealers	 and	 distributors	 in	 approximately	 100 countries	who	meet	our	sales	and	customer	service	qualifications.	No	single	customer	represented	10%	or	more	of	Garmin's	consolidated	revenues	in	the	fiscal	year ended	 December	 30,	2006.	Marketing	support	 is	provided	geographically	from	Garmin's	offices	 in	Olathe,	 Kansas	 (North,	 South	 and	 Central	America),	Romsey (effective	April	2007	Southampton),	U.K.	(Europe,	Middle	East	and	Africa)	and	Shijr,	Taiwan	(Asia,	Australia	and	New	Zealand).	Garmin's	distribution	strategy	 is intended	to	increase	Garmin's	global	penetration	and	presence	while	maintaining	high	quality	standards	to	ensure	end-user	satisfaction.

Garmin's	U.S.	consumer	product	marketing	is	handled	through	its	dealers	and	distributors	who	are	serviced	by	a	staff	of	regional	sales	managers	and	in-house sales	associates.	Some	of	Garmin's	larger	consumer	products	dealers	and	distributors	include:

· Best	Buy—one	of	the	largest	U.S.	electronics	retailers;

· BDI/Laguna—a	large	distributor	who	sells	to	such	dealers	as	Amazon.com;

· Boaters	World—a	leading	off-shore	marine	retailer	with	multiple	locations;

· Cabela's—a	major	hunting	and	fishing	catalog	retailer	for	the	outdoor	marine	market	with	"super	store"	and	"destination	store"	locations;

· Circuit	City—a	leading	U.S.	electronics	retailer;

· REI	(Recreational	Equipment	Inc.)—a	specialty	outdoor	gear	consumer	cooperative;

· Target—a	leading	mass	merchandise	chain	of	retail	stores;

· Wal-Mart—one	of	the	world's	largest	mass	retailers;

· West	Marine—the	largest	U.S.	marine	retailer	specializing	in	offshore	boating	equipment;	and

· Wynit—a	large	distributor	who	sells	to	such	dealers	as	Costco	and	Comp	USA.

Garmin's	Europe,	Middle	East	and	Africa	consumer	product	marketing	is	handled	through	local	distributors	who	resell	to	dealers.	Working	closely	with Garmin's	in-house	sales	and	marketing	staff	in	the	U.K.,	these	distributors	are	responsible	for	inventory	levels	and	staff	training	requirements	at	each	retail	location. Garmin's	Taiwan-based	marketing	team	handles	its	Asia	marketing	effort.

Garmin's	panel-mount	aviation	products	are	sold	through	distributors	around	the	world.	Garmin's	largest	aviation	distributors	include	Sportsman's	Market, Tropic	Aero	and	JA	Air	Center.	These	distributors	have	the	training,	equipment	and	certified	 staff	required	for	at-airport	installation	of	Garmin's	avionics	equipment. Garmin's	portable	aviation	products	are	sold	through	distributors	and	through	catalogs.

In	addition	to	the	traditional	distribution	channels	mentioned,	Garmin	has	many	relationships	with	original	equipment	manufacturers	(OEM).	In	the	consumer market,	Garmin's	products	are	sold	to	certain	automotive	and	motorcycle	OEMs	such	as	Chrysler/Mopar,	Toyota,	Harley-Davidson,	BMW	Motorrad,	and	Honda Motorcycle	 and	 certain	 rental	 car	 companies	 including	 Dollar/Thrifty,	Enterprise,	 Avis,	 Budget,	 National,	 and	 Alamo.	 Garmin	 has	 also	 developed	promotional relationships	with	certain	automotive	dealerships	in	certain	countries	including	BMW,	Mazda,	Saab	and	Ford.	Garmin's	products	are	also	standard	equipment	on	various models	of	boats	manufactured	by	Allison	Boats,	Bennington	Marine,	Cigarette	Racing	Team,	Inc.,	Cobalt	Boats,	G3	Boats,	Premier	Marine	and	Pro	Sports	Boats	and	are optional	equipment	on	boats	manufactured	by	Chaparral	Boats,	Inc.,	Cruiser	Yachts,	Formula	Boats,	Glacier	Bay	Catamarans,	Inc.,	Mastercraft	Boat	Company	and	Pro- Line	 Boats.	 In	 the	 aviation	 market,	Garmin's	 avionics	 are	 standard	 equipment	 on	 various	 models	 of	 aircraft	 built	 by	Cessna	Aircraft	 Company,	 Cirrus	 Design Corporation,	 Columbia	 Aircraft	Manufacturing	 Corporation,	 Diamond	Aircraft	 Industries,	 EADS	 SOCATA,	 Eurocopter,	 Mooney	Aircraft	 Corporation,	 Raytheon Aircraft	Company,	Robinson	Helicopter,	and	the	New	Piper	Aircraft	Company.	Other	aircraft	manufacturers	offer	Garmin's	products	as	optional	equipment.

# Competition

The	market	for	navigation,	communications	and	information	products	is	highly	competitive.	Garmin	believes	the	principal	competitive	factors	impacting	the market	for	its	products	are	design,	functionality,	quality	and	reliability,	customer	service,	brand,	price,	time-to-market	and	availability.	Garmin	believes	that	it	generally competes	favorably	in	each	of	these	areas.

Garmin	believes	that	its	principal	competitors	for	portable	automotive	products	are	TomTom	NV,	Magellan	Navigation,	Inc.	("Magellan"),	Alpine	Electronics, Inc.,	Navman,	Mio	Technology	Ltd.	and	Sony	Corporation.	Garmin	believes	that	its	principal	competitors	for	handheld	recreational	product	lines	are	Magellan	and Lowrance	Electronics,	Inc.	("Lowrance")	For	marine	chartplotter	products,	Garmin	believes	that	its	principal	competitors	are	Raymarine	Ltd.	("Raymarine"),	Furuno Electronic	Company	("Furuno"),	Navman,	the	Standard	Vertex	Division	of	Yaesu	Co.	 Ltd.	("Standard"),	and	Simrad	Yachting	AS.	For	Garmin's	fishfinder/depth sounder	product	lines,	Garmin	believes	that	its	principal	competitors	are	Lowrance,	Raymarine,	the	Humminbird	division	of	Johnson	Outdoors,	Inc.,	Navman,	Simrad and	Furuno.	For	Garmin's	general	aviation	product	lines,	Garmin	considers	its	principal	competitors	to	be	Lowrance,	for	portable	GPS	units,	and	Honeywell,	Inc., Avidyne	Corporation,	L-3	Avionics	Systems,	Meggitt	PLC,	Rockwell	Collins,	 Inc.,	Universal	Avionics	Systems	Corporation,	Chelton	Flight	Systems	and	Free	Flight Systems	for	panel-mount	GPS	and	display	units.	For	Garmin's	Family	Radio	Service	and	General	Mobile	Radio	Service	product	line,	Garmin	believes	that	its	principal competitors	are	Motorola,	Inc.	("Motorola"),	Cobra	and	Audiovox	Corporation.

# Research	and	Development

Garmin's	product	innovations	are	driven	by	its	strong	emphasis	on	research	and	development	and	the	close	partnership	between	Garmin's	engineering	and manufacturing	teams.	Garmin's	products	are	created	by	its	engineering	and	development	staff,	which	numbered	970	people	worldwide	as	of	December	31,	2006. Garmin's	 manufacturing	 staff	 includes	 manufacturing	 process	 engineers	 who	 work	closely	 with	 Garmin's	 design	 engineers	 to	 ensure	 manufacturability	 and manufacturing	cost	control	for	its	products.	Garmin's	development	staff	includes	industrial	designers,	as	well	as	software	engineers,	electrical	engineers,	mechanical engineers	and	cartographic	engineers.	Garmin	believes	the	industrial	design	of	its	products	has	played	an	important	role	in	Garmin's	success.	Once	a	development project	is	initiated	and	approved,	a	multi-disciplinary	team	is	created	to	design	the	product	and	transition	it	into	manufacturing.

Below	is	a	table	of	Garmin's	expenditures	on	research	and	development	over	the	last	three	fiscal	years.

|  | December	30,<br>2006 | December	31,<br>2005 | December	25,<br>2004 |
| :--- | :--- | :--- | :--- |
| ($'s\tin\tthousands)\nResearch\tand\tdevelopment | $113,314 | $74,879 | $61,580 |
| Percent\tof\tnet\tsales | 6.4% | 7.3% | 8.0% |

# Manufacturing	and	Operations

Garmin	believes	that	one	of	its	core	competencies	is	its	manufacturing	capability	at	its	Shijr	and	Jhongli,	Taiwan	facilities,	its	Olathe,	Kansas	facility,	and	its Salem,	Oregon	facility.	Garmin	believes	that	its	vertically	integrated	approach	has	provided	it	the	following	benefits:

Reduced	time-to-market.	Utilizing	concurrent	engineering	techniques,	Garmin's	products	are	introduced	to	production	at	an	early	development	stage	and	the feedback	provided	by	manufacturing	is	incorporated	into	the	design	before	mass	production	begins.	In	this	manner,	Garmin	attempts	to	reduce	the	time	required	to	move a	product	from	its	design	phase	to	mass	production	deliveries,	with	improved	quality	and	yields.	Reducing	time	to	market	has	enabled	Garmin	to	offer	several	industry firsts,	such	as	the	Rino	GPS-enabled	Family	Radio	Service/General	Mobile	Radio	Service	two-way	radio,	the	iQue	3600a	portable	digital	assistant	with	integrated	GPS and	mapping,	and	the	GNS	430,	which	integrates	traditional	aviation	navigation	and	communications	systems	with	GPS	in	a	single	package.

Design	and	process	optimization.	Garmin	uses	its	manufacturing	resources	to	rapidly	prototype	design	concepts,	products	and	processes	in	order	to	achieve higher	efficiency,	lower	cost	and	better	value	for	customers.	Garmin's	ability	to	fully	explore	product	design	and	manufacturing	process	concepts	has	enabled	it	to optimize	its	designs	to	minimize	size	and	weight	in	GPS	devices	that	are	functional,	waterproof,	and	rugged.

Logistical	agility.	Operating	its	own	manufacturing	facilities	helps	Garmin	minimize	problems,	such	as	component	shortages	and	long	component	lead	times which	are	common	in	the	electronics	industry.	Many	products	can	be	re-engineered	to	bypass	component	shortages	or	reduce	cost	and	the	new	designs	can	be	delivered to	market	quickly.	Garmin	reacts	rapidly	to	changes	in	market	demand	by	striving	to	maintain	a	safety	stock	of	long-lead	components	and	by	rescheduling	components from	one	product	line	to	another.

Garmin's	design,	manufacturing,	distribution,	and	servicing	processes	in	our	US,	Taiwan,	and	UK	facilities	are	certified	to	ISO	9001-2000,	an	international quality	standard	developed	by	the	International	Organization	for	Standardization.	Garmin's	Taiwan	manufacturing	facilities	have	also	achieved	TS	16949:2002 certification,	a	quality	standard	for	automotive	suppliers.	In	addition,	Garmin's	aviation	panel-mount	products	are	designed	and	manufactured	according	to	processes which	are	approved	and	monitored	by	the	FAA.

In	January	2007,	Garmin's	Taiwan	facilities	also	achieved	certification	of	their	environmental	management	systems	to	the	ISO14001:1994	standard.	This certification	recognizes	that	Garmin's	Taiwan	subsidiary	has	systems	and	processes	in	place	to	minimize	or	prevent	harmful	effects	on	the	environment	and	to	strive continually	to	improve	its	environmental	performance.

# Materials

Garmin	purchases	components	for	its	products	from	a	number	of	suppliers	around	the	world.	For	certain	components,	Garmin	relies	on	sole	source	suppliers. The	failure	of	our	suppliers	to	deliver	components	in	sufficient	quantities	and	in	a	timely	manner	could	adversely	affect	our	business.

# Seasonality

Our	sales	are	subject	to	some	seasonal	fluctuation.	Typically,	sales	of	our	consumer	products	are	highest	in	the	second	quarter,	due	to	increased	demand	during the	spring	and	summer	marine	season	and	the	Father's	Day/graduation	buying	season,	and	in	the	fourth	quarter,	due	to	increased	demand	during	the	holiday	buying season.	Sales	of	consumer	products	are	also	influenced	by	the	timing	of	the	release	of	new	products.	Our	aviation	products	do	not	experience	much	seasonal	variation, but	are	more	influenced	by	the	timing	of	the	release	of	new	products	when	the	initial	demand	is	typically	the	strongest.

# Backlog

Our	sales	are	generally	of	a	consumer	nature	and	there	is	a	relatively	short	cycle	between	order	and	shipment.	Therefore,	we	believe	that	backlog	information	is not	material	to	the	understanding	of	our	business.	We	typically	ship	most	orders	within	72	hours	of	receipt.

# Intellectual	Property

Our	success	and	ability	to	compete	is	dependent	in	part	on	our	proprietary	technology.	We	rely	on	a	combination	of	patent,	copyright,	trademark	and	trade	secret laws,	as	well	as	confidentiality	agreements,	to	establish	and	protect	our	proprietary	rights.	As	of	February	26,	2007,	we	held	291	U.S.	patents	and	13	foreign	patents.	As of	February	26,	2007,	we	had	190	U.S.	patent	applications	and	26	foreign	patent	applications	pending.	In	addition,	Garmin	often	relies	on	licenses	of	intellectual property	for	use	in	its	business.	For	example,	Garmin	obtains	licenses	for	digital	cartography	technology	for	use	in	our	products	from	various	sources.	As	of	February	26, 2007,	we	held	68	U.S.	trademark	registrations	and	135	foreign	trademark	registrations.	Additional	trademarks	are	pending	registration.

We	believe	that	our	continued	success	depends	on	the	intellectual	skills	of	our	employees	and	their	ability	to	continue	to	innovate.	Garmin	will	continue	to	file and	prosecute	patent	applications	when	appropriate	to	attempt	to	protect	Garmin's	rights	in	its	proprietary	technologies.

There	is	no	assurance	that	our	current	patents,	or	patents	which	we	may	later	acquire,	may	successfully	withstand	any	challenge,	in	whole	or	in	part.	It	is	also possible	that	any	patent	issued	to	us	may	not	provide	us	with	any	competitive	advantages,	or	that	the	patents	of	others	will	preclude	us	from	manufacturing	and marketing	certain	products.	Despite	our	efforts	to	protect	our	proprietary	rights,	unauthorized	parties	may	attempt	to	copy	aspects	of	our	products	or	to	obtain	and	use information	that	we	regard	as	proprietary.	Litigation	may	be	necessary	in	the	future	to	enforce	our	intellectual	property	rights,	to	protect	its	trade	secrets,	to	determine	the validity	and	scope	of	the	proprietary	rights	of	others	or	to	defend	against	claims	of	infringement	or	invalidity.

# Regulations

The	telecommunications	industry	is	highly	regulated,	and	the	regulatory	environment	in	which	Garmin	operates	is	subject	to	change.	In	accordance	with Federal	Communication	Commission	("FCC")	rules	and	regulations,	wireless	transceiver	and	cellular	handset	products	are	required	to	be	certified	by	the	FCC	and comparable	authorities	in	foreign	countries	where	they	are	sold.	Garmin's	products	sold	in	Europe	are	required	to	comply	with	relevant	directives	of	the	European Commission.	A	delay	in	receiving	required	certifications	for	new	products	or	enhancements	to	Garmin's	products	or	losing	certification	for	Garmin's	existing	products could	adversely	affect	our	business.	In	addition,	aviation	products	that	are	intended	for	installation	in	"type	certificated	aircraft"	are	required	to	be	certified	by	the	FAA, its	European	counterpart,	the	European	Aviation	Safety	Agency,	and	other	comparable	organizations	before	they	can	be	used	in	an	aircraft.

Because	Garmin	Corporation,	one	of	the	Company's	principal	subsidiaries,	is	located	in	Taiwan,	foreign	exchange	control	laws	and	regulations	of	Taiwan	with respect	to	remittances	into	and	out	of	Taiwan	may	have	an	impact	on	Garmin's	operations.	The	Taiwan	Foreign	Exchange	Control	Statute,	and	regulations	thereunder, provide	that	all	foreign	exchange	transactions	must	be	executed	by	banks	designated	to	handle	such	business	by	the	Ministry	of	Finance	of	Taiwan	and	by	the	Central Bank	of	China,	also	referred	to	as	the	CBC.	Current	regulations	favor	trade-related	foreign	exchange	transactions.	Consequently,	foreign	currency	earned	from	exports of	merchandise	and	services	may	now	be	retained	and	used	freely	by	exporters,	while	all	foreign	currency	needed	for	the	import	of	merchandise	and	services	may	be purchased	freely	from	the	designated	foreign	exchange	banks.	Aside	from	trade-related	foreign	exchange	transactions,	Taiwan	companies	and	residents	may,	without foreign	exchange	approval,	remit	outside	and	into	Taiwan	foreign	currencies	of	up	to	$50	million	and	$5	million	respectively,	or	their	equivalent,	each	calendar	year. Currency	conversions	within	the	limits	are	processed	by	the	designated	banks	and	do	not	have	to	be	reviewed	and	approved	by	the	CBC.	The	above	limits	apply	to remittances	involving	a	conversion	between	New	Taiwan	Dollars	and	U.S.	Dollars	or	other	foreign	currencies.	The	CBC	typically	approves	foreign	exchange	in	excess of	the	limits	if	a	party	applies	with	the	CBC	for	review	and	presents	legitimate	business	reasons	justifying	the	currency	conversion.	A	requirement	is	also	imposed	on	all enterprises	to	register	all	medium	and	long-term	foreign	debt	with	the	CBC.

# Environmental	Matters

The	European	Union	("EU")	has	enacted	the	Restriction	of	the	Use	of	Certain	Hazardous	Substances	in	Electrical	and	Electronic	Equipment	Directive	("RoHS Directive")	and	the	Waste	Electrical	and	Electronic	Equipment	Directive	("WEEE	Directive").	The	RoHS	Directive	requires	EU	member	states	to	enact	laws	prohibiting the	use	of	certain	substances,	including	lead,	mercury,	cadmium	and	hexavalent	chromium,	in	certain	electronic	products	put	on	the	market	after	July	1,	2006.	The WEEE	Directive	requires	EU	member	states	to	enact	laws	that	were	to	go	into	effect	by	August	13,	2005	regulating	the	collection,	recovery	and	recycling	of	waste	from certain	electronic	products.	We	have	established	a	program	in	order	to	comply	with	such	laws	and	regulations	as	they	are	enacted	by	the	EU	member	states.	We	have modified	the	design	of	our	products	and	our	manufacturing	processes	in	order	to	comply	with	such	laws	and	regulations.

The	People's	Republic	of	China	has	enacted	legislation	which	is	widely	known	as	"China	RoHS".	The	first	phase	of	China	RoHS	will	take	effect	on	March	1, 2007	and	will	require	the	disclosure	and	marking	of	certain	substances,	including	lead,	mercury,	cadmium	and	hexavalent	chromium	in	certain	electronic	products.	We have	established	a	program	in	order	to	comply	with	the	first	phase	of	China	RoHS.

The	State	of	California	has	enacted	legislation	similar	to	the	RoHS	Directive	and	other	states	and	countries	have	promulgated	or	proposed	legislation	similar	to the	RoHS	Directive	and/or	the	WEEE	Directive.	The	need	for	and	cost	of	our	compliance	with	such	legislation	cannot	yet	be	determined	but	the	cost	could	be substantial.

Several	states	have	enacted	laws	pertaining	to	the	reduction	of	mercury	in	products	and	the	labeling	of	mercury-containing	products,	including	the	member states	of	the	Interstate	Mercury	Education	and	Reduction	Clearinghouse	(IMERC).	Some	of	these	laws,	including	those	in	Connecticut,	New	York,	Vermont	and Louisiana,	are	applicable	to	certain	of	Garmin's	GPS	products.	We	have	established	an	ongoing	compliance	program	to	ensure	that	we	are	fulfilling	the	notice	and labeling	requirements	set	forth	in	the	relevant	mercury	legislation.

Portable	Garmin	products	which	use	AC/DC	adapters	as	an	option	for	battery	charging	would	require	submissions	of	energy-use	profiles	if	and	when	the	future implementing	measures	resulting	from	the	EU	EuP	(Energy	Using	Products)	Directive	define	such	products	as	being	within	their	scope.

# Employees

As	of	December	30,	2006,	Garmin	had	4,751	full-time	employees	worldwide,	of	whom	1,728	were	in	the	United	States,	53	were	in	Canada,	2,807	were	in Taiwan,	160	were	in	Europe,	and	3	were	in	other	global	locations.	None	of	Garmin's	employees	are	represented	by	a	labor	union	or	covered	by	a	collective	bargaining agreement.	Garmin	considers	its	employee	relations	to	be	good.

# Item	1A.	Risk	Factors

The	risks	described	below	are	not	the	only	ones	facing	our	company.	Additional	risks	and	uncertainties	not	presently	known	to	us	or	that	we	currently	believe	to	be immaterial	may	also	impair	our	business	operations.	If	any	of	the	following	risks	occur,	our	business,	financial	condition	or	operating	results	could	be	materially adversely	affected.

# Risks	Related	to	the	Company

Our	Global	Positioning	System	products	depend	upon	satellites	maintained	by	the	United	States	Department	of	Defense.	If	a	significant	number	of	these satellites	become	inoperable,	unavailable	or	are	not	replaced	or	if	the	policies	of	the	United	States	government	for	the	use	of	the	Global	Positioning	System without	charge	are	changed	or	if	there	is	interference	with	Global	Positioning	System	signals,	our	business	will	suffer.

The	Global	Positioning	System	is	a	satellite-based	navigation	and	positioning	system	consisting	of	a	constellation	of	orbiting	satellites.	The	satellites	and	their ground	control	and	monitoring	stations	are	maintained	and	operated	by	the	United	States	Department	of	Defense.	The	Department	of	Defense	does	not	currently	charge users	for	access	to	the	satellite	signals.	These	satellites	and	their	ground	support	systems	are	complex	electronic	systems	subject	to	electronic	and	mechanical	failures	and possible	sabotage.	The	satellites	were	originally	designed	to	have	lives	of	7.5	years	and	are	subject	to	damage	by	the	hostile	space	environment	in	which	they	operate. However,	of	the	current	deployment	of	satellites	in	place,	some	have	been	operating	for	more	than	13	years.

If	a	significant	number	of	satellites	were	to	become	inoperable,	unavailable	or	are	not	replaced,	it	would	impair	the	current	utility	of	our	Global	Positioning System	products	and	would	have	a	material	negative	effect	on	our	business.	In	addition,	there	can	be	no	assurance	that	the	U.S.	government	will	remain	committed	to	the operation	and	maintenance	of	Global	Positioning	System	satellites	over	a	long	period,	or	that	the	policies	of	the	U.S.	government	that	provide	for	the	use	of	the	Global Positioning	 System	 without	 charge	 and	 without	accuracy	 degradation	 will	 remain	 unchanged.	 Because	 of	 the	 increasing	 commercial	applications	 of	 the	 Global Positioning	System,	other	U.S.	government	agencies	may	become	involved	in	the	administration	or	the	regulation	of	the	use	of	Global	Positioning	System	signals. However,	in	a	presidential	policy	statement	issued	in	December	2004,	the	Bush	administration	indicated	that	the	U.S.	is	committed	to	supporting	and	improving	the Global	Positioning	System	and	will	continue	providing	it	free	from	direct	user	fees.

Some	of	our	products	also	use	signals	from	systems	that	augment	GPS,	such	as	the	Wide	Area	Augmentation	System	(WAAS).	WAAS	is	operated	by	the Federal	 Aviation	Administration	(FAA).	Any	curtailment	of	the	operating	capability	of	WAAS	could	 result	in	decreased	user	capability	for	many	of	our	aviation products,	thereby	impacting	our	markets.

Any	of	the	foregoing	factors	could	affect	the	willingness	of	buyers	of	our	products	to	select	Global	Positioning	System-based	products	instead	of	products based	on	competing	technologies.

# A	shut	down	of	U.S.	airspace	or	imposition	of	restrictions	on	general	aviation	would	harm	our	business.

On	September	11,	2001,	terrorists	hijacked	and	crashed	four	passenger	aircraft	operated	by	commercial	air	carriers,	resulting	in	major	loss	of	life	and	property. Following	the	terrorist	attacks,	the	FAA	ordered	all	aircraft	operating	in	the	U.S.	to	be	grounded	for	several	days.	In	addition	to	this	shut	down	of	U.S.	airspace,	the general	aviation	industry	was	further	impacted	by	the	additional	restrictions	implemented	by	the	FAA	on	those	flights	that	fly	utilizing	Visual	Flight	Rules	(VFR).	The FAA	restricted	VFR	flight	inside	30	enhanced	Class	B	(a	20-25	mile	radius	around	the	30	largest	metropolitan	areas	in	the	USA)	airspace	areas.	The	Aircraft	Owners and	Pilots	Association	(AOPA)	estimated	that	these	restrictions	affected	approximately	41,800	general	aviation	aircraft	based	at	282	airports	inside	the	30	enhanced Class	B	airspace	areas.	The	AOPA	estimates	that	approximately	90%	of	all	general	aviation	flights	are	conducted	VFR,	and	that	only	15%	of	general	aviation	pilots	are current	to	fly	utilizing	Instrument	Flight	Rules	(IFR).

The	shut	down	of	U.S.	airspace	following	September	11,	2001	caused	reduced	sales	of	our	general	aviation	products	and	delays	in	the	shipment	of	our	products manufactured	in	our	Taiwan	manufacturing	facility	to	our	distribution	facility	in	Olathe,	Kansas,	thereby	adversely	affecting	our	ability	to	supply	new	and	existing products	to	our	dealers	and	distributors.

Any	future	shut	down	of	U.S.	airspace	or	imposition	of	restrictions	on	general	aviation	could	have	a	material	adverse	effect	on	our	business	and	financial results.

# Any	reallocation	of	radio	frequency	spectrum	could	cause	interference	with	the	reception	of	Global	Positioning	System	signals.	This	interference	could	harm our	business.

Our	Global	Positioning	System	technology	is	dependent	on	the	use	of	the	Standard	Positioning	Service	(SPS)	provided	by	the	U.S.	Government's	Global Positioning	System	satellites.	The	Global	Positioning	System	operates	in	radio	frequency	bands	that	are	globally	allocated	for	radio	navigation	satellite	services.	The assignment	of	spectrum	is	controlled	by	an	international	organization	known	as	the	International	Telecommunications	Union	(''ITU'').	The	Federal	Communications Commission	(''FCC'')	is	responsible	for	the	assignment	of	spectrum	for	non-government	use	in	the	United	States	in	accordance	with	ITU	regulations.	Any	ITU	or	FCC reallocation	 of	 radio	 frequency	 spectrum,	 including	 frequency	 band	segmentation	 or	 sharing	 of	 spectrum,	 could	 cause	 interference	 with	 the	 reception	of	 Global Positioning	System	signals	and	may	materially	and	adversely	affect	the	utility	and	reliability	of	our	products,	which	would,	in	turn,	have	a	material	adverse	effect	on	our operating	results.	In	addition,	emissions	from	mobile	satellite	service	and	other	equipment	operating	in	adjacent	frequency	bands	or	inband	may	materially	and	adversely affect	the	utility	and	reliability	of	our	products,	which	could	result	in	a	material	adverse	effect	on	our	operating	results.	The	FCC	continually	receives	proposals	for	new technologies	and	services,	such	as	ultra-wideband	technologies,	which	may	seek	to	operate	in,	or	across,	the	radio	frequency	bands	currently	used	by	the	GPS	SPS. Adverse	decisions	by	the	FCC	that	result	in	harmful	interference	to	the	delivery	of	the	GPS	SPS	may	materially	and	adversely	affect	the	utility	and	reliability	of	our products,	which	could	result	in	a	material	adverse	effect	on	our	business	and	financial	condition.

# If	we	are	not	successful	in	the	continued	development,	introduction	or	timely	manufacture	of	new	products,	demand	for	our	products	could	decrease.

We	expect	that	a	significant	portion	of	our	future	revenue	will	continue	to	be	derived	from	sales	of	newly	introduced	products.	The	market	for	our	products	is characterized	by	rapidly	changing	technology,	evolving	industry	standards	and	changes	in	customer	needs.	If	we	fail	to	introduce	new	products,	or	to	modify	or	improve our	existing	products,	in	response	to	changes	in	technology,	industry	standards	or	customer	needs,	our	products	could	rapidly	become	less	competitive	or	obsolete.	We must	continue	to	make	significant	investments	in	research	and	development	in	order	to	continue	to	develop	new	products,	enhance	existing	products	and	achieve	market acceptance	for	such	products.	However,	 there	can	be	no	assurance	 that	development	stage	products	will	be	successfully	completed	or,	if	developed,	will	achieve significant	customer	acceptance.

If	we	are	unable	to	successfully	develop	and	introduce	competitive	new	products,	and	enhance	our	existing	products,	our	future	results	of	operations	would	be adversely	affected.	Our	pursuit	of	necessary	technology	may	require	substantial	time	and	expense.	We	may	need	to	license	new	technologies	to	respond	to	technological change.	These	licenses	may	not	be	available	to	us	on	terms	that	we	can	accept	or	may	materially	change	the	gross	profits	that	we	are	able	to	obtain	on	our	products.	We may	not	succeed	in	adapting	our	products	to	new	technologies	as	they	emerge.	Development	and	manufacturing	schedules	for	technology	products	are	difficult	to predict,	and	there	can	be	no	assurance	that	we	will	achieve	timely	initial	customer	shipments	of	new	products.	The	timely	availability	of	these	products	in	volume	and their	acceptance	by	customers	are	important	to	our	future	success.	From	time	to	time	we	have	experienced	delays	in	shipping	certain	of	our	new	products	and	any	future delays,	whether	due	to	product	development	delays,	manufacturing	delays,	lack	of	market	acceptance,	delays	in	regulatory	approval,	or	otherwise,	could	have	a	material adverse	effect	on	our	results	of	operations.

# If	we	do	not	correctly	anticipate	demand	for	our	products,	we	may	not	be	able	to	secure	sufficient	quantities	or	cost-effective	production	of	our	products	or	we could	have	costly	excess	production	or	inventories.

Historically,	we	have	experienced	steady	increases	in	demand	for	our	products	although	we	did	experience	a	decline	in	demand	for	our	aviation	products	in 2001	due	to	declining	economic	conditions	and	the	shut	down	of	U.S.	airspace	as	a	result	of	the	terrorist	attacks	that	occurred	on	September	11,	2001.	We	have	generally been	able	to	increase	production	to	meet	this	increasing	demand.	However,	the	demand	for	our	products	depends	on	many	factors	and	will	be	difficult	to	forecast.	We expect	that	it	will	become	more	difficult	to	forecast	demand	as	we	introduce	and	support	multiple	products	and	as	competition	in	the	market	for	our	products	intensifies. Significant	unanticipated	fluctuations	in	demand	could	cause	the	following	problems	in	our	operations:

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

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

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

# We	may	become	subject	to	significant	product	liability	costs.

If	our	aviation	products	malfunction	or	contain	errors	or	defects,	airplane	collisions	or	crashes	could	occur	resulting	in	property	damage,	personal	injury	or death.	Malfunctions	or	errors	or	defects	in	our	marine	navigational	products	could	cause	boats	to	run	aground	or	cause	other	wreckage,	personal	injury	or	death.	If	any	of these	events	occurs,	we	could	be	subject	to	significant	liability	for	personal	injury	and	property	damage	and	under	certain	circumstances	could	be	subject	to	a	judgment for	punitive	damages.	We	maintain	insurance	against	accident-related	risks	involving	our	products.	However,	there	can	be	no	assurance	that	such	insurance	would	be sufficient	to	cover	the	cost	of	damages	to	others	or	that	such	insurance	will	continue	to	be	available	at	commercially	reasonable	rates.	In	addition,	insurance	coverage generally	will	not	cover	awards	of	punitive	damages.	If	we	are	unable	to	maintain	sufficient	insurance	to	cover	product	liability	costs	or	if	our	insurance	coverage	does not	cover	the	award,	this	could	have	a	materially	adverse	impact	on	our	business,	financial	condition	and	results	of	operations.

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

We	are	dependent	on	third	party	suppliers	for	various	components	used	in	our	current	products.	Some	of	the	components	that	we	procure	from	third	party suppliers	include	 semiconductors	 and	 electroluminescent	 panels,	 liquid	 crystal	 displays,	memory	chips	and	microprocessors.	The	cost,	quality	and	availability	of components	are	essential	to	the	successful	production	and	sale	of	our	products.	Some	components	we	use	are	from	sole	source	suppliers.	Certain	application-specific integrated	circuits	incorporating	our	proprietary	designs	are	manufactured	for	us	by	sole	source	suppliers.	Alternative	sources	may	not	be	currently	available	for	these sole	source	components.

In	the	past	(including	in	the	first	half	of	2004)	we	have	experienced	shortages	of	liquid	crystal	displays	and	other	components.	In	addition,	if	there	are	shortages in	supply	of	components,	the	costs	of	such	components	may	rise.	If	suppliers	are	unable	to	meet	our	demand	for	components	on	a	timely	basis	and	if	we	are	unable	to obtain	an	alternative	source	or	if	the	price	of	the	alternative	source	is	prohibitive,	or	if	the	costs	of	components	rise,	our	ability	to	maintain	timely	and	cost-effective production	of	our	products	would	be	seriously	harmed.

We	license	mapping	data	for	use	in	our	products	from	various	sources.	There	are	only	a	limited	number	of	suppliers	of	mapping	data	for	each	geographical region.	If	we	are	unable	to	continue	licensing	such	mapping	data	and	are	unable	to	obtain	an	alternative	source,	or	if	the	price	of	the	alternative	source	is	prohibitive,	our ability	to	supply	mapping	data	for	use	in	our	products	would	be	seriously	harmed.

# We	rely	on	independent	dealers	and	distributors	to	sell	our	products,	and	disruption	to	these	channels	would	harm	our	business.

Because	we	sell	a	majority	of	our	products	to	independent	dealers	and	distributors,	we	are	subject	to	many	risks,	including	risks	related	to	their	inventory	levels and	support	for	our	products.	In	particular,	our	dealers	and	distributors	maintain	significant	levels	of	our	products	in	their	inventories.	If	dealers	and	distributors	attempt to	reduce	their	levels	of	inventory	or	if	they	do	not	maintain	sufficient	levels	to	meet	customer	demand,	our	sales	could	be	negatively	impacted.

Many	of	our	dealers	and	distributors	also	sell	products	offered	by	our	competitors.	If	our	competitors	offer	our	dealers	and	distributors	more	favorable	terms, those	dealers	and	distributors	may	de-emphasize	or	decline	to	carry	our	products.	In	the	future,	we	may	not	be	able	to	retain	or	attract	a	sufficient	number	of	qualified dealers	and	distributors.	If	we	are	unable	to	maintain	successful	relationships	with	dealers	and	distributors	or	to	expand	our	distribution	channels,	our	business	will suffer.

# Failure	to	manage	our	growth	and	expansion	effectively	could	adversely	impact	our	business.

Our	ability	to	successfully	offer	our	products	and	implement	our	business	plan	in	a	rapidly	evolving	market	requires	an	effective	planning	and	management process.	We	continue	to	increase	the	scope	of	our	operations	domestically	and	internationally	and	have	grown	our	shipments	and	headcount	substantially.	This	growth has	placed,	and	our	anticipated	growth	in	future	operations	will	continue	to	place,	a	significant	strain	on	our	management	systems	and	resources.

# Our	business	may	suffer	if	we	are	not	able	to	hire	and	retain	sufficient	qualified	personnel	or	if	we	lose	our	key	personnel.

Our	future	 success	 depends	 partly	 on	 the	 continued	 contribution	 of	 our	 key	executive,	 engineering,	 sales,	 marketing,	 manufacturing	 and	 administrative personnel.	We	currently	do	not	have	employment	agreements	with	any	of	our	key	executive	officers.	We	do	not	have	key	man	life	insurance	on	any	of	our	key	executive officers	and	do	not	currently	intend	to	obtain	such	insurance.	The	loss	of	the	services	of	any	of	our	senior	level	management,	or	other	key	employees,	could	harm	our business.	Recruiting	and	retaining	the	skilled	personnel	we	require	to	maintain	our	market	position	may	be	difficult.	For	example,	in	some	recent	years	there	has	been	a nationwide	 shortage	 of	 qualified	electrical	 engineers	 and	 software	 engineers	 who	 are	 necessary	 for	 us	 to	 design	and	develop	new	products	 and	 therefore,	 it	 has sometimes	been	challenging	to	recruit	such	personnel.	If	we	fail	to	hire	and	retain	qualified	employees,	we	may	not	be	able	to	maintain	and	expand	our	business.

# Gross	margins	for	our	products	may	fluctuate	or	erode.

Gross	margins	on	our	automotive/mobile	products	have	been	declining	due	to	price	reductions	in	the	increasingly	competitive	market	for	personal	navigation devices	(PNDs).	We	expect	that	gross	margins	on	automotive/mobile	products	will	continue	to	erode.	In	addition,	our	overall	gross	margin	may	fluctuate	from	period	to period	due	to	a	number	of	factors,	including	product	mix,	competition	and	unit	volumes.	In	particular,	the	average	selling	prices	of	a	specific	product	tend	to	decrease over	that	product's	life.	To	offset	such	decreases,	we	intend	to	rely	primarily	on	obtaining	yield	improvements	and	corresponding	cost	reductions	in	the	manufacture	of existing	products	and	on	introducing	new	products	that	incorporate	advanced	features	and	therefore	can	be	sold	at	higher	average	selling	prices.	However,	there	can	be no	assurance	that	we	will	be	able	to	obtain	any	such	yield	improvements	or	cost	reductions	or	introduce	any	such	new	products	in	the	future.	To	the	extent	that	such	cost reductions	and	new	product	introductions	do	not	occur	in	a	timely	manner	or	our	products	do	not	achieve	market	acceptance,	our	business,	financial	condition	and	results of	operations	could	be	materially	adversely	affected.

# Our	quarterly	operating	results	are	subject	to	fluctuations	and	seasonality.

Our	operating	results	are	difficult	to	predict.	Our	future	quarterly	operating	results	may	fluctuate	significantly.	If	such	operating	results	decline,	the	price	of	our stock	would	likely	decline.	As	we	expand	our	operations,	our	operating	expenses,	particularly	our	advertising	and	research	and	development	costs,	may	increase	as	a percentage	of	our	sales.	If	revenues	decrease	and	we	are	unable	to	reduce	those	costs	rapidly,	our	operating	results	would	be	negatively	affected.

Historically,	our	revenues	have	usually	been	weaker	in	the	first	and	third	quarters	of	each	fiscal	year	and	have,	from	time	to	time,	been	lower	than	the	preceding quarter.	Our	devices	are	highly	consumer-oriented,	and	consumer	buying	is	traditionally	lower	in	these	quarters.	Sales	of	certain	of	our	marine	and	automotive	products tend	to	be	higher	in	our	second	fiscal	quarter	due	to	increased	consumer	spending	for	such	products	during	the	recreational	marine,	fishing,	and	travel	season.	Sales	of our	automotive/mobile	products	also	tend	to	be	higher	in	our	fourth	fiscal	quarter	due	to	increased	consumer	spending	patterns	on	electronic	devices	during	the	holiday season.	In	addition,	we	attempt	to	time	our	new	product	releases	to	coincide	with	relatively	higher	consumer	spending	in	the	second	and	fourth	fiscal	quarters,	which contributes	to	these	seasonal	variations.

# Our	quarterly	financial	statements	will	reflect	fluctuations	in	foreign	currency	translation.

Our	Taiwan	subsidiary	holds,	and	is	expected	to	continue	to	hold,	significant	cash,	cash	equivalents,	and	marketable	securities	and	receivables	denominated	in U.S.	Dollars.	Because	the	U.S.	Dollar	is	the	primary	currency	for	our	business	and	in	order	to	substantially	reduce	the	economic	consequence	of	any	variation	in	the exchange	rate	for	the	U.S.	Dollar	and	the	New	Taiwan	Dollar	on	these	assets,	management	expects	that	the	Taiwan	subsidiary	will	continue	to	hold	the	majority	of	these assets	in	U.S.	Dollar	or	U.S.	Dollar	denominated	instruments.	Nonetheless,	U.S.	GAAP	requires	the	Company	at	the	end	of	each	accounting	period	to	translate	into	New Taiwan	dollars	all	such	U.S.	Dollar	denominated	assets	held	by	our	Taiwan	subsidiary.	This	translation	is	required	because	the	New	Taiwan	Dollar	is	the	functional currency	of	the	subsidiary.	This	U.S.	GAAP-mandated	translation	will	cause	us	to	recognize	gain	or	loss	on	our	financial	statements	as	the	New	Taiwan	Dollar/U.S. Dollar	exchange	rate	varies.	Such	gain	or	loss	will	create	variations	in	our	earnings	per	share.	Because	there	is	minimal	cash	impact	caused	by	such	exchange	rate variations,	management	will	continue	to	focus	on	the	Company's	operating	performance	before	the	impact	of	the	foreign	currency	translation.

# If	we	are	unable	to	compete	effectively	with	existing	or	new	competitors,	our	resulting	loss	of	competitive	position	could	result	in	price	reductions,	fewer customer	orders,	reduced	margins	and	loss	of	market	share.

The	markets	for	our	products	are	highly	competitive,	and	we	expect	competition	to	increase	in	the	future.	Some	of	our	competitors	have	significantly	greater financial,	technical	and	marketing	resources	than	we	do.	These	competitors	may	be	able	to	respond	more	rapidly	to	new	or	emerging	technologies	or	changes	in	customer requirements.	They	may	also	be	able	to	devote	greater	resources	to	the	development,	promotion	and	sale	of	their	products.	Increased	competition	could	result	in	price reductions,	fewer	customer	orders,	reduced	margins	and	loss	of	market	share.	Our	failure	to	compete	successfully	against	current	or	future	competitors	could	seriously harm	our	business,	financial	condition	and	results	of	operations.

# Our	intellectual	property	rights	are	important	to	our	operations,	and	we	could	suffer	loss	if	they	infringe	upon	other's	rights	or	are	infringed	upon	by	others.

We	rely	on	a	combination	of	patents,	copyrights,	trademarks	and	trade	secrets,	confidentiality	provisions	and	licensing	arrangements	to	establish	and	protect	our proprietary	rights.	To	this	end,	we	hold	rights	to	a	number	of	patents	and	registered	trademarks	and	regularly	file	applications	to	attempt	to	protect	our	rights	in	new technology	and	trademarks.	However,	there	is	no	guarantee	that	our	patent	applications	will	become	issued	patents,	or	that	our	trademark	applications	will	become registered	trademarks.	Moreover,	even	if	approved,	our	patents	or	trademarks	may	thereafter	be	successfully	challenged	by	others	or	otherwise	become	invalidated	for	a variety	of	reasons.	Thus,	any	patents	or	trademarks	we	currently	have	or	may	later	acquire	may	not	provide	us	a	significant	competitive	advantage.

Third	parties	may	claim	that	we	are	infringing	their	intellectual	property	rights.	Such	claims	could	have	a	material	adverse	effect	on	our	business	and	financial condition.	From	time	to	time	we	receive	letters	alleging	infringement	of	patents.	Litigation	concerning	patents	or	other	intellectual	property	is	costly	and	time	consuming. We	may	seek	licenses	from	such	parties,	but	they	could	refuse	to	grant	us	a	license	or	demand	commercially	unreasonable	terms.	We	might	not	have	sufficient	resources to	pay	for	the	licenses.	Such	infringement	claims	could	also	cause	us	to	incur	substantial	liabilities	and	to	suspend	or	permanently	cease	the	use	of	critical	technologies	or processes	or	the	production	or	sale	of	major	products.

# Failure	to	obtain	required	certifications	of	our	products	on	a	timely	basis	could	harm	our	business.

We	have	certain	products,	especially	in	our	aviation	segment,	that	are	subject	to	governmental	and	similar	certifications	before	they	can	be	sold.	For	example, Federal	Aviation	Administration	(''FAA'')	certification	is	required	for	all	of	 our	aviation	products	that	are	intended	for	installation	in	type	certificated	aircraft.	To	the extent	required,	certification	is	an	expensive	and	time-consuming	process	that	requires	significant	focus	and	resources.	An	inability	to	obtain,	or	excessive	delay	in obtaining,	such	certifications	could	have	an	adverse	effect	on	our	ability	to	introduce	new	products	and,	therefore,	our	operating	results.		In	addition,	we	cannot	assure you	that	our	certified	products	will	not	be	decertified.	Any	such	decertification	could	have	an	adverse	effect	on	our	operating	results.

# Our	business	is	subject	to	economic,	political	and	other	risks	associated	with	international	sales	and	operations.

Our	business	is	subject	to	risks	associated	with	doing	business	internationally.	We	estimate	that	approximately	38%	of	our	net	sales	in	the	fiscal	year	ended December	30,	2006	represented	products	shipped	to	international	destinations.	Accordingly,	our	business,	financial	condition	and	results	of	operations	could	be	harmed by	a	variety	of	international	factors,	including:

· changes	in	foreign	currency	exchange	rates;

· changes	in	a	specific	country's	or	region's	political	or	economic	conditions,	particularly	in	emerging	markets;

· trade	protection	measures	and	import	or	export	licensing	requirements;

· potentially	negative	consequences	from	changes	in	tax	laws;

· difficulty	in	managing	widespread	sales	and	manufacturing	operations;	and

· less	effective	protection	of	intellectual	property.

# We	may	experience	unique	economic	and	political	risks	associated	with	companies	that	operate	in	Taiwan.

Relations	between	Taiwan	and	the	People's	Republic	of	China,	also	referred	to	as	the	PRC,	and	other	factors	affecting	the	political	or	economic	conditions	of Taiwan	in	the	future	could	materially	adversely	affect	our	business,	financial	condition	and	results	of	operations	and	the	market	price	and	the	liquidity	of	our	shares.	Our principal	manufacturing	facilities	where	we	manufacture	all	of	our	products,	except	our	panel-mounted	aviation	products,	are	located	in	Taiwan.

Taiwan	has	a	unique	international	political	status.	The	PRC	asserts	sovereignty	over	all	of	China,	including	Taiwan,	certain	other	islands	and	all	of	mainland China.	The	PRC	government	does	not	recognize	the	legitimacy	of	the	Taiwan	government.	Although	significant	economic	and	cultural	relations	have	been	established during	recent	years	between	Taiwan	and	the	PRC,	the	PRC	government	has	indicated	that	it	may	use	military	force	to	gain	control	over	Taiwan	in	certain	circumstances, such	as	the	declaration	of	independence	by	Taiwan.	Relations	between	Taiwan	and	the	PRC	have	on	occasion	adversely	affected	the	market	value	of	 Taiwanese companies	and	could	negatively	affect	our	operations	in	Taiwan	in	the	future.

# There	is	uncertainty	as	to	our	shareholders'	ability	to	enforce	certain	foreign	civil	liabilities	in	the	Cayman	Islands	and	Taiwan.

We	are	a	Cayman	Islands	company	and	a	substantial	portion	of	our	assets	are	located	outside	the	United	States,	particularly	in	Taiwan.	As	a	result,	it	may	be difficult	to	effect	service	of	process	within	the	United	States	upon	us.	In	addition,	there	is	uncertainty	as	to	whether	the	courts	of	the	Cayman	Islands	or	Taiwan	would recognize	or	enforce	judgments	of	United	States	courts	obtained	against	us	predicated	upon	the	civil	liability	provisions	of	the	securities	laws	of	the	United	States	or	any state	thereof,	or	be	competent	to	hear	original	actions	brought	in	the	Cayman	Islands	or	Taiwan	against	us	predicated	upon	the	securities	laws	of	the	United	States	or	any state	thereof.

# Our	shareholders	may	face	difficulties	in	protecting	their	interests	because	we	are	incorporated	under	Cayman	Islands	law.

Our	corporate	affairs	are	governed	by	our	Memorandum	and	Articles	of	Association,	as	amended,	and	by	the	Companies	Law	(2004	Revision)	and	the	common law	of	the	Cayman	Islands.	The	rights	of	our	shareholders	and	the	fiduciary	responsibilities	of	our	directors	under	Cayman	Islands	law	are	not	as	clearly	established	as under	statutes	or	judicial	precedent	in	existence	in	jurisdictions	in	the	United	States.	Therefore,	you	may	have	more	difficulty	in	protecting	your	interests	in	the	face	of actions	by	the	management,	directors	or	our	controlling	shareholders	than	would	shareholders	of	a	corporation	incorporated	in	a	jurisdiction	in	the	United	States,	due	to the	comparatively	less	developed	nature	of	Cayman	Islands	law	in	this	area.

Unlike	many	jurisdictions	in	the	United	States,	Cayman	Islands	law	does	not	specifically	provide	for	shareholder	appraisal	rights	on	a	merger	or	consolidation of	a	company.	This	may	make	it	more	difficult	for	you	to	assess	the	value	of	any	consideration	you	may	receive	in	a	merger	or	consolidation	or	to	require	that	the	offeror give	you	additional	consideration	if	you	believe	the	consideration	offered	is	insufficient.

Shareholders	of	Cayman	Islands	exempted	companies	such	as	ourselves	have	no	general	rights	under	Cayman	Islands	law	to	inspect	corporate	records	and accounts	or	to	obtain	copies	of	lists	of	shareholders	of	the	company.	This	may	make	it	more	difficult	for	you	to	obtain	the	information	needed	to	establish	any	facts necessary	for	a	shareholder	motion	or	to	solicit	proxies	from	other	shareholders	in	connection	with	a	proxy	contest.

Subject	to	limited	exceptions,	under	Cayman	Islands	law,	a	minority	shareholder	may	not	bring	a	derivative	action	against	the	board	of	directors.	Our	Cayman Islands	counsel	has	advised	that	they	are	not	aware	of	any	reported	class	action	or	derivative	action	having	been	brought	in	a	Cayman	Islands	court.

# We	may	pursue	strategic	acquisitions,	investments,	strategic	partnerships	or	other	ventures,	and	our	business	could	be	materially	harmed	if	we	fail	to successfully	identify,	complete	and	integrate	such	transactions.

We	intend	to	evaluate	acquisition	opportunities	and	opportunities	to	make	investments	in	complementary	businesses,	technologies,	services	or	products,	or	to enter	into	any	strategic	partnerships	with	parties	who	can	provide	access	to	those	assets,	additional	product	or	services	offerings	or	additional	industry	expertise.	In December	2006,	we	acquired	Dynastream	Innovations,	Inc.	In	January	2007,	we	acquired	Digital	Cyclone,	Inc.	and	EME	TecSat	SAS.	We	may	not	be	able	to	 identify suitable	 acquisition,	 investment	 or	 strategic	 partnership	 candidates,	or	 if	we	do	 identify	suitable	candidates	 in	 the	 future,	 we	 may	 not	 be	 able	to	complete	 those transactions	on	commercially	favorable	terms,	or	at	all.

Any	future	acquisition	could	result	in	difficulties	assimilating	acquired	operations	and	products	and	diversion	of	capital	and	management's	attention	away	from other	business	issues	and	opportunities.	Integration	of	acquired	companies	may	result	in	problems	related	to	integration	of	technology	and	inexperienced	management teams.	In	addition,	the	key	personnel	of	the	acquired	company	may	decide	not	to	work	for	us.	Our	management	has	had	limited	experience	in	assimilating	acquired organizations	and	products	into	our	operations.	We	may	not	successfully	integrate	internal	controls,	compliance	under	the	Sarbanes-Oxley	Act	of	2002	and	other corporate	governance	matters,	operations,	personnel	or	products	related	to	acquisitions	we	may	make	in	the	future.	If	we	fail	to	successfully	integrate	such	transactions, our	business	could	be	materially	harmed.

# We	have	benefited	in	the	past	from	Taiwan	government	tax	incentives	offered	on	certain	high	technology	capital	investments	that	may	not	always	be	available.

Our	effective	tax	rate	is	lower	than	the	U.S.	Federal	statutory	rate,	because	we	have	benefited	from	incentives	offered	in	Taiwan	related	to	our	high	technology investments	in	Taiwan.	The	loss	of	these	tax	benefits	could	have	a	significant	effect	on	our	financial	results	in	the	future.

# Changes	in	our	United	States	federal	income	tax	classification	or	in	applicable	tax	law	could	result	in	adverse	tax	consequences	to	our	shareholders.

We	do	 not	believe	that	we	(or	any	of	our	non-United	States	subsidiaries)	are	currently	a	''passive	foreign	investment	company''	for	United	States	federal income	tax	purposes.	We	do	not	expect	to	become	a	passive	foreign	investment	company.	However,	because	the	passive	foreign	investment	company	determination	is made	annually	on	the	basis	of	facts	and	circumstances	that	may	be	beyond	our	control	and	because	the	principles	for	applying	the	passive	foreign	investment	company tests	are	not	entirely	clear,	we	cannot	assure	that	we	will	not	become	a	passive	foreign	investment	company.	If	we	are	a	passive	foreign	investment	company	in	any	year, then	any	of	our	shareholders	that	is	a	United	States	person	could	be	liable	to	pay	tax	at	ordinary	income	tax	rates	plus	an	interest	charge	upon	some	distributions	by	us	or when	that	shareholder	sells	our	common	shares	at	a	gain.	Further,	if	we	are	classified	as	a	passive	foreign	investment	company	in	any	year	in	which	a	United	States person	is	a	shareholder,	we	generally	will	continue	to	be	treated	as	a	passive	foreign	investment	company	with	respect	to	such	shareholder	in	all	succeeding	years, regardless	of	whether	we	continue	to	satisfy	the	income	or	asset	tests	described	above.	Additional	tax	considerations	would	apply	if	we	or	any	of	our	subsidiaries	were	a controlled	foreign	corporation.

# Risks	Relating	to	Our	Shares

# The	volatility	of	our	stock	price	could	adversely	affect	investment	in	our	common	shares.

The	market	price	of	our	common	shares	has	been,	and	may	continue	to	be,	highly	volatile.	During	2006,	the	closing	price	of	our	common	shares	ranged	from	a low	of	$29.75	to	a	high	of	$56.89.	A	variety	of	factors	could	cause	the	price	of	our	common	shares	to	fluctuate,	perhaps	substantially,	including:

· announcements	and	rumors	of	developments	related	to	our	business	or	the	industry	in	which	we	compete;

· quarterly	fluctuations	in	our	actual	or	anticipated	operating	results;

· the	availability,	pricing	and	timeliness	of	delivery	of	components,	such	as	flash	memory	and	liquid	crystal	displays,	used	in	our	products;

· general	conditions	in	the	worldwide	economy,	including	fluctuations	in	interest	rates;

· announcements	of	technological	innovations;

· new	products	or	product	enhancements	by	us	or	our	competitors;

· product	obsolescence	and	our	ability	to	manage	product	transitions;

· developments	in	patents	or	other	intellectual	property	rights	and	litigation;

· developments	in	our	relationships	with	our	customers	and	suppliers;	and

· any	significant	acts	of	terrorism	against	the	United	States,	Taiwan	or	significant	markets	where	we	sell	our	products.

In	addition,	in	recent	years	the	stock	market	in	general	and	the	markets	for	shares	of	technology	companies	in	particular,	have	experienced	extreme	price fluctuations	which	have	often	been	unrelated	to	the	operating	performance	of	affected	companies.	Any	such	fluctuations	in	the	future	could	adversely	affect	the	market price	of	our	common	shares,	and	the	market	price	of	our	common	shares	may	decline.

# Our	officers	and	directors	exert	substantial	influence	over	us.

As	of	February	15,	2007	members	and	former	members	of	our	Board	of	Directors	and	our	executive	officers,	together	with	members	of	their	families	and entities	that	may	be	deemed	affiliates	of	or	related	to	such	persons	or	entities,	beneficially	owned	approximately	41%	of	our	outstanding	common	shares.	Accordingly, these	shareholders	may	be	able	to	determine	the	outcome	of	corporate	actions	requiring	shareholder	approval,	such	as	mergers	and	acquisitions.	This	level	of	ownership may	have	a	significant	effect	in	delaying,	deferring	or	preventing	a	change	in	control	of	Garmin	and	may	adversely	affect	the	voting	and	other	rights	of	other	holders	of our	common	shares.

# Provisions	in	our	shareholder	rights	plan	and	our	charter	documents	might	deter,	delay	or	prevent	a	third	party	from	acquiring	us	and	Cayman	Islands corporate	law	may	impede	a	takeover,	which	could	decrease	the	value	of	our	shares.

Our	Board	of	Directors	has	the	authority	to	issue	up	to	1,000,000	preferred	shares	and	to	determine	the	price,	rights,	preferences,	privileges	and	restrictions, including	voting	rights,	of	those	shares	without	any	further	vote	or	action	by	the	shareholders.	This	could	have	an	adverse	impact	on	the	market	price	of	our	common shares.	We	have	no	present	plans	to	issue	any	preferred	shares,	but	we	may	do	so.	The	rights	of	the	holders	of	common	shares	may	be	subject	to,	and	adversely	affected by,	the	rights	of	the	holders	of	any	preferred	shares	that	may	be	issued	in	the	future.	In	addition,	we	have	adopted	a	classified	board	of	directors.	Our	shareholders	are unable	to	remove	any	director	or	the	entire	board	of	directors	without	a	super	majority	vote.	In	addition,	a	super	majority	vote	is	required	to	approve	transactions	with interested	 shareholders.	Shareholders	 do	 not	 have	 the	 right	 to	 call	 a	 shareholders	 meeting.	 We	 have	adopted	 a	 shareholders'	 rights	 plan	 which	 under	 certain circumstances	would	significantly	impair	the	ability	of	third	parties	to	acquire	control	of	us	without	prior	approval	of	our	Board	of	Directors.	This	shareholders'	rights plan	and	the	provisions	in	our	charter	documents	could	make	it	more	difficult	for	a	third	party	to	acquire	us,	even	if	doing	so	would	benefit	our	shareholders.

Unlike	many	jurisdictions	in	the	United	States,	Cayman	Islands	law	does	not	currently	provide	for	mergers	as	that	expression	is	understood	under	corporate	law in	the	United	States.	While	Cayman	Islands	law	does	have	statutory	provisions	that	provide	for	the	reconstruction	and	amalgamation	of	companies,	which	are	commonly referred	to	in	the	Cayman	Islands	as	a	"scheme	of	arrangement,"	the	procedural	and	legal	requirements	necessary	to	consummate	these	transactions	are	more	rigorous and	take	longer	to	complete	than	the	procedures	typically	required	to	consummate	a	merger	in	the	United	States.	Under	Cayman	Islands	law	and	practice,	a	scheme	of arrangement	in	relation	to	a	solvent	Cayman	Islands	exempted	company	must	be	approved	at	a	shareholders'	meeting	by	a	majority	of	the	company's	shareholders	who are	present	and	voting	(either	in	person	or	by	proxy)	at	such	meeting.	The	shares	voted	in	favor	of	the	scheme	of	arrangement	must	also	represent	at	least	75%	of	the value	of	each	class	of	the	company's	shareholders	(excluding	the	shares	owned	by	the	parties	to	the	scheme	of	arrangement)	present	and	voting	at	the	meeting.	The Grand	Court	of	the	Cayman	Islands	must	also	sanction	the	convening	of	these	meetings	and	the	terms	of	the	amalgamation.	Although	there	is	no	requirement	to	seek	the consent	of	the	creditors	of	the	parties	involved	in	the	scheme	of	arrangement,	the	Grand	Court	typically	seeks	to	ensure	that	the	creditors	have	consented	to	the	transfer of	their	liabilities	to	the	surviving	entity	or	that	the	scheme	of	arrangement	does	not	otherwise	materially	adversely	affect	the	creditors'	interests.	Furthermore,	the	Grand Court	will	only	approve	a	scheme	of	arrangement	if	it	is	satisfied	that:

· the	statutory	provisions	as	to	majority	vote	have	been	complied	with;

· the	shareholders	have	been	fairly	represented	at	the	meeting	in	question;

· the	scheme	of	arrangement	is	such	as	a	businessman	would	reasonably	approve;	and

· the	scheme	of	arrangement	is	not	one	that	would	more	properly	be	sanctioned	under	some	other	provision	of	the	Companies	Law.

# Item	1B.	Unresolved	Staff	Comments

None.

# Item	2.	Properties

Garmin	International,	Inc.	and	Garmin	USA,	Inc.,	occupy	a	facility	of	approximately	750,000	square	feet	on	42	acres	in	Olathe,	Kansas,	where	the	majority	of product	design	and	development	work	is	conducted,	the	majority	of	aviation	panel-mount	products	are	manufactured	and	products	are	warehoused,	distributed,	and supported	for	North,	Central	and	South	America.	Garmin's	subsidiary,	Garmin	Realty,	LLC	also	owns	an	additional	46	acres	of	land	on	the	Olathe	site	for	future expansion.	In	connection	with	the	bond	financings	for	the	facility	in	Olathe	and	the	expansion	of	that	facility,	the	City	of	Olathe	holds	the	legal	title	to	the	Olathe	facility which	is	leased	to	Garmin's	subsidiaries	by	the	City.	Upon	the	payment	in	full	of	the	outstanding	bonds,	the	City	of	Olathe	is	obligated	to	transfer	title	to	Garmin's subsidiaries	for	the	aggregate	sum	of	$200.	Garmin	International,	Inc.	has	purchased	all	the	outstanding	bonds	and	continues	to	hold	the	bonds	until	maturity	in	order	to benefit	from	property	tax	abatement.

Garmin	Corporation,	owns	and	occupies	a	249,326	square	feet	facility	in	Shijr,	Taipei	County,	Taiwan	and	a	223,469	square	feet	facility	in	Jhongli,	Tao-Yang County,	Taiwan	where	it	manufactures	all	of	Garmin's	consumer	and	portable	aviation	products	and	warehouses,	markets	and	supports	products	for	the	Pacific	Rim countries.

Garmin	AT,	Inc.	leases	approximately	15	acres	of	land	in	Salem,	Oregon	under	a	ground	lease.	This	ground	lease	expires	in	2030	but	Garmin	AT	has	the	option to	 extend	the	ground	lease	until	2050.	Garmin	AT,	Inc.	owns	and	occupies	a	52,000	square	 foot	facility	and	a	33,000	square	foot	aircraft	hangar,	flight	test	and certification	facility	on	this	land.

Garmin	International,	Inc.	leases	148,320	square	feet	of	land	at	New	Century	Airport	in	Gardner,	Kansas	under	a	ground	lease	which	expires	in	2026.	Garmin International,	Inc.	owns	and	occupies	a	47,254	square	foot	aircraft	hangar,	flight	test	and	certification	facility	on	this	land	which	is	used	in	development	and	certification of	aviation	products.

Garmin	International,	Inc.	leases	approximately	15,000	square	feet	of	space	at	669	North	Michigan	Avenue	in	Chicago,	Illinois	which	is	used	as	a	retail	store and	showroom	for	Gamin	products.	This	lease	expires	in	November	2016.

Garmin	International,	Inc.	also	leases	an	aggregate	of	3,233	square	feet	of	office	space	in	Tempe,	Arizona	for	software	development,	and	in	Wichita,	Kansas for	support	of	Garmin's	aviation	original	equipment	manufacturer	operations.	In	addition,	Garmin	International,	Inc.	leases	1,700	square	feet	of	office	space	in	Sausalito, California	which	houses	the	MotionBased	division	of	Garmin	International,	Inc.

Garmin	(Europe)	Ltd.	leases	an	aggregate	of	33,642	square	feet	under	four	leases	in	Romsey,	England	for	warehousing,	marketing	and	supporting	Garmin products	in	Europe,	Africa	and	the	Middle	East.	Garmin	(Europe)	Ltd.	also	repairs	products	at	this	facility.	In	October	2006,	Garmin	(Europe)	Ltd	purchased	a	155,000 sq.	ft.	building	located	in	Totton,	Southampton,	England	and	expects	to	relocate	its	operations	to	this	building	beginning	in	April	2007.

Dynastream	Innovations,	Inc.	leases	an	aggregate	of	14,575	square	feet	in	two	buildings	in	Cochrane,	Alberta,	Canada.

# Item	3.	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's	 wholly	 owned	 subsidiary	 Garmin	 International,	 Inc.	("Garmin	 International")	 and	 five	 other	 unrelated	 companies,	 alleging infringement	of	U.S.	Patent	No.	5,241,671	("the	'671	patent").	Garmin	International	believes	that	it	should	not	be	found	liable	for	infringement	of	the	'671	patent	and additionally	 that	 the	 '671	 patent	 is	 invalid.	 On	 December	30,	 2005,	 Garmin	 International	 filed	 a	 Motion	 for	 Summary	 Judgment	 for	 Claim	Invalidity	Based	on Indefiniteness.	On	March	1,	2006	the	court	held	a	hearing	on	construction	of	the	claims	of	the	'671	patent.	The	parties	await	the	court's	ruling	on	Garmin's	summary judgment	motion	and	the	court's	claim	construction	order.	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.	Garmin International	 believes	 that	 it	should	 not	 be	 found	 liable	 for	 infringement	 of	 the	 '018	 patent	 and	 additionally	that	 the '018	 patent is	 invalid.	 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.	Garmin	International	believes	that	it	should	not	be	found	liable	for	infringement	of	the	'437 patent	and	additionally	that	the	'437	patent	is	invalid.	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,	we	believe	that	the	claims	are	without	merit	and	we	will	vigorously	defend	these	actions.

# Garmin	Ltd.	v.	TomTom,	Inc.;	Garmin	Corporation	v.	TomTom,	Inc.	(Wisconsin)

These	lawsuits	 were	 filed	 by	 Garmin	 Ltd.	 and	 Garmin	 Corporation	 against	 TomTom,	 Inc.	("TomTom")	 on	 January	 31,	 2006	 and	 February	 1,	 2006, respectively,	in	the	United	States	District	Court	for	the	Western	District	of	Wisconsin.	The	lawsuits	have	been	consolidated.	Garmin	Ltd.	and	Garmin	Corporation	filed an	amended	complaint	on	May	5,	2006.	The	amended	complaint	claims	that	certain	TomTom	products	infringe	U.S.	Patents	Nos.	6,188,956	and	6,222,485	owned	by Garmin	 Corporation	and	U.S.	Patents	Nos.	6,901,330;	6,687,615	and	6,999,873	owned	by	Garmin	Ltd.	On	April	27,	2006,	TomTom	served	amended	answers	and counterclaims	on	Garmin	Ltd.	and	Garmin	Corporation	which	claim	that	certain	products	sold	by	these	companies	are	infringing	three	U.S.	patents	that	were	purchased by	an	affiliate	of	TomTom	International,	B.V.	from	Horizon	Navigation,	Inc.	on	April	21,	2006.	The	three	 patents	are	U.S.	Patents	5,291,412,	5,550,538	and	5,922,042. The	 amended	 answers	and	counterclaims	also	added	Garmin	International,	Inc.	as	a	counterclaim	defendant.	On	December	22,	2006	the	court	ruled	on	summary judgment	motions	filed	by	the	parties.	The	court	ruled	that	Garmin	Ltd.	and	its	subsidiaries	did	not	infringe	any	claim	of	any	of	the	three	patents	asserted	by	TomTom	in its	counterclaims,	that	TomTom	did	not	infringe	certain	claims	of	the	patents	asserted	by	Garmin	and	that	certain	claims	of	some	of	the	patents	asserted	by	Garmin	were invalid.	Ten	claims	asserted	against	TomTom	by	Garmin	under	a	total	 of	four	patents	remain	unadjudicated	and	Garmin	has	filed	a	motion	to	reopen	the	case	to	address these	claims.	This	motion	is	currently	pending	before	the	court.

# Garmin	Ltd.	v.	TomTom,	Inc.	(Texas)

On	August	23,	2006,	Garmin	Ltd.	filed	a	lawsuit	in	the	United	States	District	Court	for	the	Eastern	District	of	Texas	claiming	that	certain	TomTom	products infringe	U.S.	Patent	No.	7,062,378	owned	by	Garmin	Ltd.	On	October	20,	2006	TomTom	filed	an	answer	denying	infringement	and	also	filed	a	motion	to	transfer	the lawsuit	to	the	United	States	District	Court	for	the	Western	District	of	Wisconsin,	which	motion	has	been	opposed	by	Garmin.	On	December	20,	2006	the	court	held	a hearing	on	the	motion	to	transfer	and	the	motion	is	currently	pending	before	the	court.	The	case	is	currently	in	the	early	stages	of	discovery.	Pending	its	ruling	on	the motion	to	transfer,	the	court	has	scheduled	the	trial	for	November	2008.

# Garmin	(Europe)	Ltd.,	Garmin	International,	Inc,	Garmin	Corporation	and	Garmin	Ltd.	v.	TomTom	International	B.V.

Garmin	Ltd.	and	the	above-named	subsidiaries	of	Garmin	Ltd.	filed	a	lawsuit	against	TomTom	International	B.V.	in	the	District	Court	in	the	Hague,	the Netherlands,	on	June	27,	2006.	The	lawsuit	seeks	a	declaration	of	non-infringement	of	TomTom's	European	Community	Registered	Design	No.	000267968-001	(the "Registered	Design").	TomTom	responded	on	July	14,	2006	by	filing	an	action	for	preliminary	relief	in	the	District	Court	in	the	Hague,	the	Netherlands,	claiming	that certain	models	of	Garmin's	StreetPilot	products	infringe	the	Registered	Design.	TomTom	has	also	filed	a	counterclaim	for	infringement	of	the	Registered	Design	in	the main	lawsuit.	On	November	2,	2006,	the	court	issued	a	judgment	in	the	preliminary	relief	proceedings	finding	that	Garmin's	products	do	not	infringe	the	Registered Design	and	denying	TomTom's	claim	for	preliminary	relief.	TomTom	has	filed	an	appeal	of	this	judgment.	The	court	also	awarded	Garmin	approximately	37,000	euros for	attorneys'	fees	and	costs.	Garmin	believes	that	none	of	its	products	infringe	the	Registered	Design	and	Garmin	is	prosecuting	vigorously	its	action	for	a	declaration of	non-infringement.	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,	we	believe	that	our	products	do	not	infringe	the	Registered	Design	and	we	intend	to	vigorously	prosecute	our	lawsuit	seeking	a	declaration of	non-infringement.

# Garmin	(Europe)	Ltd.	v.	TomTom	International	B.V.

	On	July	17,	2006,	Garmin	(Europe)	Ltd.	filed	a	lawsuit	against	TomTom	International	B.V.	in	the	High	Court	of	Justice	in	London,	England.	The	lawsuit	seeks a	declaration	that	United	Kingdom	Patent	No.	GB	2400293	B	(the	"'293	patent")	owned	by	TomTom	International	B.V.,	is	invalid	and	an	order	that	the	'293	patent	be revoked.	On	July	31,	2006,	TomTom	International	B.V.	filed	a	defense	indicating	that	it	intended	to	defend	this	lawsuit	and	also	filed	a	counterclaim	alleging	that certain	models	of	Garmin's	StreetPilot	products	and	Garmin's	nüvi	products	infringe	the	'293	patent.	Garmin	(Europe)	Ltd.	believes	that	none	of	its	products	infringe	the '293	patent	and	that	the	'293	patent	is	invalid.	On	December	20,	2006,	Garmin	(Europe)	Ltd.	filed	a	second	lawsuit	against	TomTom	International	B.V.	in	the	High Court	of	Justice	in	London,	England.	This	lawsuit	seeks	declarations	that	United	Kingdom	Patent	Nos.	GB	2400292	B	(the	"'292	patent")	and	GB	2400294	B	(the	"'294 patent"),	owned	by	TomTom	International	B.V.,	are	invalid	and	seeks	orders	that	the	'292	and	'294	patents	be	revoked.	On	January	17,	2007,	TomTom	International B.V.	filed	a	defense	indicating	that	it	intended	to	defend	this	lawsuit.	Garmin	(Europe)	Ltd.	intends	to	prosecute	vigorously	its	actions	seeking	declarations	of	invalidity and	revocation	of	the	'292,	'293,	and	'294	patents	and	to	defend	vigorously	TomTom's	allegation	of	infringement	of	the	'293	patent.	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,	we	believe	that	TomTom's counterclaim	under	the	'293	patent	is	without	merit	and	we	intend	to	vigorously	defend	it.

From	time	to	time	the	Company	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	4.	Submission	of	Matters	to	a	Vote	of	Security	Holders

No	matters	were	submitted	to	a	vote	of	shareholders	of	Garmin	during	the	fourth	fiscal	quarter	of	2006.

# Executive	Officers	of	the	Registrant

Pursuant	to	General	Instruction	G(3)	of	Form	10-K	and	instruction	3	to	paragraph	(b)	of	Item	401	of	Regulation	S-K,	the	following	list	is	included	as	an unnumbered	Item	in	Part	I	of	this	Annual	Report	on	Form	10-K	in	lieu	of	being	included	in	the	Company's	Definitive	Proxy	Statement	in	connection	with	its	annual meeting	of	shareholders	scheduled	for	June	8,	2007.

Dr.	Min	H.	Kao,	age	58,	has	served	as	Chairman	of	Garmin	Ltd.	since	August	2004	and	was	previously	Co-Chairman	of	Garmin	Ltd.	from	August	2000	to August	2004.	He	has	served	as	Chief	Executive	Officer	of	Garmin	Ltd.	since	August	2002	and	previously	served	as	Co-Chief	Executive	Officer	from	August	2000	to August	2002.	He	has	been	President	of	Garmin	Corporation	since	January	1999.	He	has	also	been	Chairman	and	a	director	of	Garmin	Corporation	since	January	1990. Dr.	 Kao	 has	 been	President	 of	 Garmin	 International,	 Inc.	 since	 March	 2002,	 Chairman	 of	 Garmin	International,	 Inc.	 since	 July	 2004	 and	 a	 director	 of	 Garmin International,	Inc.	since	August	1990.	He	served	as	Vice	President	of	Garmin	International,	Inc.	from	April	1991	to	March	2002.	Dr.	Kao	has	been	President	of	Garmin USA,	Inc.	since	March	2002	and	a	director	of	Garmin	USA,	Inc.	since	December	2001.	Dr.	Kao	has	been	President	of	Garmin	AT,	Inc.	and	a	director	of	Garmin	AT, Inc.	since	August	2003.	He	served	as	Vice	President	of	Garmin	USA,	Inc.	from	December	2001	to	March	2002.	Dr	Kao	has	been	a	director	of	Garmin	(Europe)	Ltd. since	1992,	a	director	of	Garmin	N.V.	and	Garmin	B.V.	since	2005	and	a	director	of	Dynastream	 Innovation,	Inc,	since	December	2006.	Dr.	Kao	holds	Ph.D.	and	MS degrees	in	Electrical	Engineering	from	the	University	of	Tennessee	and	a	BS	degree	in	Electrical	Engineering	from	National	Taiwan	University.

Kevin	S.	Rauckman,	age	44,	has	served	as	Chief	Financial	Officer	and	Treasurer	of	Garmin	Ltd.	since	August	2000.	He	has	been	Director	of	Finance	and Treasurer	of	Garmin	International,	Inc.	since	January	1999	and	a	director	of	Garmin	International,	Inc.	since	April	2001.	He	has	been	Treasurer	and	a	director	of	Garmin USA,	Inc.	since	December	2001.	Mr.	Rauckman	has	been	Chief	Financial	Officer	and	Treasurer	and	a	director	of	Garmin	AT,	Inc.	since	August	2003.	Mr.	Rauckman has	been	a	director	of	Garmin	Corporation	since	July	2004.	Mr.	Rauckman	has	been	a	director	of	Garmin	(Europe)	Ltd.	since	July	2004	and	a	director	of	Dynastream Innovations,	Inc.	since	December	2006.	Mr.	Rauckman	holds	BS	and	MBA	degrees	in	Business	from	the	University	of	Kansas.

Andrew	R.	Etkind,	age	 51,	has	served	as	General	Counsel	and	Secretary	of	Garmin	Ltd.	since	August	2000.	He	has	been	General	Counsel	of	Garmin International,	Inc.	since	February	1998	and	Secretary	since	October	1998.	He	has	been	General	Counsel	and	Secretary	of	Garmin	USA,	Inc.	since	December	2001.	Mr. Etkind	has	been	General	Counsel	and	Secretary	of	Garmin	AT,	Inc.	since	August	2003.	He	has	been	Secretary	of	Garmin	 (Europe)	Ltd.	since	March	2001	and	a	director of	Garmin	N.V.	since	2005.	Mr.	Etkind	holds	BA,	MA	and	LLM	degrees	from	Cambridge	University,	England	and	a	JD	degree	from	the	University	of	Michigan	Law School.

Clifton	A.	Pemble,	age	41,	has	served	as	a	director	of	Garmin	Ltd.	since	August	2004.	He	has	been	a	director	of	Garmin	International,	Inc.	and	Garmin	USA, Inc.	since	July	2004.	He	has	been	a	director	of	Garmin	Corporation	and	Garmin	(Europe)	Ltd.	since	July	2004.	Mr.	Pemble	has	been	a	director	of	Garmin	AT,	Inc.	since August	2003	and	a	director	of	Dynastream	Innovations,	Inc.	since	December	2006..	He	has	been	Vice	President,	Engineering	of	Garmin	International,	Inc.	since	2005. Previously,	he	was	Director	of	Engineering	of	Garmin	International,	Inc.	from	2003	to	2005	and	Software	Engineering	Manager	of	Garmin	International,	Inc.	from	1995 to	 2002	and	a	Software	Engineer	with	Garmin	International,	Inc.	from	1989	to	1995.	Mr.	Pemble	holds	BA	degrees	in	Mathematics	and	Computer	Science	from MidAmerica	Nazarene	University.

Gary	V.	Kelley,	age	60,	has	been	Vice	President,	Marketing	of	Garmin	International,	Inc.	since	2005.	Previously,	he	was	Director	of	Marketing	of	Garmin International,	Inc.	from	1992	to	2005.	He	has	also	been	Director	of	Marketing	of	Garmin	USA,	Inc.	since	January	2002.	Mr.	Kelley	was	a	director	of	Garmin	(Europe) Ltd.	from	1993	to	2004.	Mr.	Kelley	holds	a	BBA	degree	from	Baker	University.	He	also	holds	a	commercial	pilot	license	with	instrument	and	flight	instructor	ratings.

Brian	J.	Pokorny,	age	43,	has	been	Vice	President,	Operations	of	Garmin	International,	Inc.	since	2005.	Previously,	he	was	Director	of	Operations	of	Garmin International,	Inc.	from	1997	to	2005	and	Production	Planning	Manager	of	Garmin	International,	Inc.	from	1995	to	1997.	Mr.	Pokorny	holds	a	BS	degree	in	Business Management	 and	 a	 MBA	from	 the	 University	 of	 Nebraska	 -	 Lincoln	 and	 holds	 the	 professional	certification	 of	 CPIM	 (Certified	 in	 Production	 and	 Inventory Management).

All	executive	officers	are	elected	by	and	serve	at	the	discretion	of	the	Company's	Board	of	Directors.	None	of	the	executive	officers	has	an	employment agreement	with	the	Company.	There	are	no	arrangements	or	understandings	between	the	executive	officers	and	any	other	person	pursuant	to	which	he	or	she	was	or	is	to be	selected	as	an	officer.	There	is	no	family	relationship	among	any	of	the	executive	officers.	Dr.	Min	H.	Kao	is	the	brother	of	Ruey-Jeng	Kao,	who	is	a	supervisor	of Garmin	Corporation,	Garmin's	Taiwan	subsidiary,	who	serves	as	an	ex-officio	member	of	Garmin	Corporation's	Board	of	Directors.

# Item	5.	Market	for	the	Company's	Common	Shares,	Related	Shareholder	Matters	and	Issuer	Purchases	of	Equity	Securities

Garmin's	common	shares	have	traded	on	the	Nasdaq	National	Market	under	the	symbol	"GRMN"	since	its	initial	public	offering	on	December	8,	2000	(the "IPO").	As	of	February	23,	2007,	there	were	226	shareholders	of	record.

On	August	15,	2006,	a	two-for-one	stock	split	of	Garmin's	common	shares	was	effected.

The	range	of	high	and	low	closing	sales	prices	of	Garmin's	common	shares	as	reported	on	the	Nasdaq	Stock	Market	for	each	fiscal	quarter	of	fiscal	years	2006 and	2005	was	as	follows:

|  | December	30,	2006 | December	30,	2006 | December	31,	2005 | December	31,	2005 |
| :--- | :--- | :--- | :--- | :--- |
|  | High | Low | High | Low |
| First\tQuarter | $42.39 | $29.75 | $31.00 | $23.47 |
| Second\tQuarter | $54.75 | $39.97 | $23.16 | $19.75 |
| Third\tQuarter | $54.10 | $41.20 | $33.67 | $20.54 |
| Fourth\tQuarter | $56.89 | $44.53 | $35.21 | $27.32 |

The	Board	of	Directors	declared	a	cash	dividend	of	$0.25	per	common	share	to	shareholders	of	record	on	December	1,	2005	which	was	paid	on	December	15, 2005.	The	Board	of	Directors	declared	a	cash	dividend	of	$0.50	per	common	share	to	shareholders	of	record	on	December	1,	2006	which	was	paid	on	December	15, 2006.	All	dividend	amounts	and	share	prices	are	after	giving	effect	to	the	August	15,	2006	two-for-one	stock	split.

# Garmin	currently	expects	to	pay	a	cash	dividend	in	December	2007.

The	Board	of	Directors	approved	a	share	repurchase	program	on	August	3,	2006,	authorizing	the	Company	to	purchase	up	to	3.0	million	shares	of	Garmin's common	shares	as	market	and	business	conditions	warrant.	The	share	repurchase	authorization	expires	on	December	31,	2007.	There	were	1,155,300	shares	purchased under	this	authorization	during	the	fiscal	year	ended	December	30,	2006,	and	1,844,700	are	available	for	purchase	until	December	31,	2007.

We	refer	you	to	Item	12	of	this	report	under	the	caption	"Equity	Compensation	Plan	Information"	for	certain	equity	plan	information	required	to	be	disclosed by	Item	201(d)	of	Regulation	S-K.

# Stock	Performance	Graph

This	performance	graph	shall	not	be	deemed	''filed''	with	the	SEC	or	subject	to Section	18	of	the	Securities	Exchange	Act	of	1934,	nor	shall	it	be	deemed incorporated	by	reference	in	any	of	our	filings	under	the	Securities	Act	of	1933,	as	amended.

The	following	graph	illustrates	the	cumulative	total	shareholder	return	(rounded	to	the	nearest	whole	dollar)	of	Garmin	common	shares	during	the	period	from December	31,	2001	through	December	31,	2006,	and	compares	it	to	the	cumulative	total	return	on	the	NASDAQ	Composite	Index	and	the	NASDAQ	100	Index.	Garmin is	one	of	the	constituent	companies	of	the	NASDAQ	100	Index.	The	comparison	assumes	a	$100	investment	on	December	31,	2001,	in	Garmin	common	shares	and	in each	of	the	foregoing	indexes	and	assumes	reinvestment	of	dividends.

|  | 12/01 | 12/02 | 12/03 | 12/04 | 12/05 | 12/06 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Garmin\tLtd. | 100.00 | 137.43 | 257.82 | 290.39 | 319.52 | 541.42 |
| NASDAQ\tComposite | 100.00 | 71.97 | 107.18 | 117.07 | 120.50 | 137.02 |
| NASDAQ\t100 | 100.00 | 60.02 | 90.98 | 105.67 | 113.63 | 119.74 |

The	stock	price	performance	included	in	this	graph	is	not	necessarily	indicative	of	future	stock	price	performance.

# Item	6.	Selected	Financial	Data

		The	following	table	sets	forth	selected	consolidated	financial	data	of the	Company.	The	selected	consolidated	balance	sheet	data	as	of	December	30,	2006	and December	31,	2005	and	the	selected	consolidated	statement	of	income	data	for	the	years	ended	December	30,	2006,	December	31,	2005,	and	December	25,	2004	were derived	from	the	Company's	audited	consolidated	financial	statements	and	the	related	notes	thereto	which	are	included	in	Item	8	of	this	annual	report	on	Form	10-K.	The selected	consolidated	balance	sheet	data	as	of	December	25,	2004,	December	27,	2003,	and	December	28,	2002,	and	the	selected	consolidated	statement	of	income	data for	the	years	ended	December	27,	2003	and	December	28,	2002	were	derived	from	the	Company's	audited	consolidated	financial	statements,	not	included	herein.

		The	information	set	forth	below	is	not	necessarily	indicative	of	the	results	of	future	operations	and	should	be	read	together	with	"Management's	Discussion	and Analysis	of	Financial	Condition	and	Results	of	Operations"	and	the	consolidated	financial	statements	and	notes	to	those	statements	included	in	Items	7	and	8	in	Part	II	of this	Form	10-K.

|  | Dec.	30,	2006 | Dec.	31,	2005 | Dec.	25,	2004 | Dec.	27,	2003 | Dec.	28,	2002 |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | (in\tthousands,\texcept\tper\tshare\tdata) | (in\tthousands,\texcept\tper\tshare\tdata) |  |  |
| Consolidated\tStatements\tof |  |  |  |  |  |
| Income\tData: |  |  |  |  |  |
| \t\t\t\t\t\tNet\tsales | $1,774,000 | $1,027,773 | $762,549\t $ | 572,989\t $ | 465,144 |
| \t\t\t\t\t\tCost\tof\tgoods\tsold | 891,614 | 492,703 | 351,310 | 242,448 | 210,088 |
| \t\t\t\t\t\t\t\t\t\t\t\tGross\tprofit | 882,386 | 535,070 | 411,239 | 330,541 | 255,056 |
| \t\t\t\t\t\tOperating\texpenses: |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\t\t\t\tSelling,\tgeneral\tand |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tadministrative | 214,513 | 122,021 | 78,991 | 59,835 | 45,453 |
| \t\t\t\t\t\t\t\t\t\t\t\tResearch\tand\tdevelopment | 113,314 | 74,879 | 61,580 | 43,706 | 32,163 |
| \t\t\t\t\t\tTotal\toperating\texpenses | 327,827 | 196,900 | 140,571 | 103,541 | 77,616 |
| \t\t\t\t\t\tOperating\tincome | 554,559 | 338,170 | 270,668 | 227,000 | 177,440 |
| \t\t\t\t\t\tOther\tincome/(expense),\tnet\t(2),\t(3) | 39,995 | 34,430 | (15,457) | (1,057) | 5,294 |
| \t\t\t\t\t\tIncome\tbefore\tincome\ttaxes | 594,554 | 372,600 | 255,211 | 225,943 | 182,734 |
| \t\t\t\t\t\tIncome\ttax\tprovision | 80,431 | 61,381 | 49,511 | 47,309 | 39,937 |
| \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tNet\tincome | $514,123 | $311,219 | $205,700\t $ | 178,634\t $ | 142,797 |
| \t\t\t\t\t\tNet\tincome\tper\tshare:\t(4) |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tBasic | $2.38 | $1.44 | $0.95\t $ | 0.83\t $ | 0.66 |
| \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tDiluted | $2.35 | $1.43 | $0.94\t $ | 0.82\t $ | 0.66 |
| \t\t\t\t\t\tWeighted\taverage\tcommon |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\t\t\t\tshares\toutstanding:\t(4) |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tBasic | 216,340 | 216,294 | 216,322 | 216,022 | 215,548 |
| \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tDiluted | 218,845 | 218,236 | 218,060 | 217,804 | 216,402 |
| \t\t\t\t\t\tCash\tdividends\tper\tshare\t(4) | $0.50 | $0.25 | $0.25\t $ | 0.25\t $ | 0.00 |
| Balance\tSheet\tData\t(at\tend\tof |  |  |  |  |  |
| Period): |  |  |  |  |  |
| \t\t\t\t\t\tCash\tand\tcash\tequivalents | $337,321 | $334,352 | $249,909\t $ | 274,329\t $ | 216,768 |
| \t\t\t\t\t\tMarketable\tsecurities | 480,876 | 376,723 | 322,215 | 221,447 | 245,708 |
| \t\t\t\t\t\tTotal\tassets | 1,897,020 | 1,362,235 | 1,117,391 | 856,945 | 705,888 |
| \t\t\t\t\t\tTotal\tdebt\t(5) | 248 | 0 | 0 | 0 | 20,000 |
| \t\t\t\t\t\tTotal\tstockholders'\tequity | 1,557,899 | 1,157,264 | 935,857 | 749,690 | 602,499 |

(1) Our	fiscal	year-end	is	the	last	Saturday	of	the	calendar	year	and	does	not	always	fall	on	December	31.

(2) Other	income/(expense),	net	mainly	consists	of	interest	income,	interest	expense	and	foreign	currency	gain	(loss).

(4) All	prior	period	common	stock	and	applicable	share	and	per	share	amounts	have	been	retroactively	adjusted	to	reflect	a	2-for-1	split	of	the	Company's	common stock	effective	August	15,	2006.

(5) Total	debt	consists	of	notes	payable	and	long-term	debt.

# Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations

The	following	discussion	and	analysis	of	our	financial	condition	and	results	of	operations	focuses	on	and	is	intended	to	clarify	the	results	of	our	operations, certain	changes	in	our	financial	position,	liquidity,	capital	structure	and	business	developments	for	the	periods	covered	by	the	consolidated	financial	statements	included in	this	Form	10-K.	This	discussion	should	be	read	in	conjunction	with,	and	is	qualified	by	reference	to,	the	other	related	information	including,	but	not	limited	to,	the audited	consolidated	financial	statements	(including	the	notes	thereto),	the	description	of	our	business,	all	as	set	forth	in	this	Form	10-K,	as	well	as	the	risk	factors discussed	above	in	Item	1A.

As	previously	noted,	the	discussion	set	forth	below,	as	well	as	other	portions	of	this	Form	10-K,	contain	statements	concerning	potential	future	events.	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	on	which	the	statements	are	based	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 discussed	above	in	Item	1A.	Readers	are	strongly	encouraged	to	consider	those	factors	when	evaluating	any	such	forward-looking	statement.	We	do	not	undertake	to update	any	forward-looking	statements	in	this	Form	10-K.

Garmin's	fiscal	year	is	a	52-53	week	period	ending	on	the	last	Saturday	of	the	calendar	year.	Fiscal	year	2005	contained	53	weeks	compared	to	52	weeks	for fiscal	years	2006,	2004,	2003,	and	2002.	Unless	otherwise	stated,	all	years	and	dates	refer	to	the	Company's	fiscal	year	and	fiscal	periods.	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,	dollar	amounts	set	forth	in	the	tables	are	in	thousands,	except	per	share	data.

# Overview

We	are	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,	which	serve	the	marine,	outdoor/fitness,	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	can	vary	significantly.	As such,	the	segments	are	managed	separately.	Our	portable	GPS	receivers	and	accessories	for	marine,	recreation/fitness	and	automotive/mobile	segments	are	sold	primarily to	retail	outlets.	Our	aviation	products	are	portable	and	panel-mount	avionics	for	Visual	Flight	Rules	and	Instrument	Flight	Rules	navigation	and	are	sold	primarily	to retail	outlets	and	certain	aircraft	manufacturers.

Since	our	first	products	were	delivered	in	1991,	we	have	generated	positive	income	from	operations	each	year	and	have	funded	our	growth	from	these	profits. Our	sales	have	increased	at	a	compounded	annual	growth	rate	of	40%	since	2002	and	our	net	income	has	increased	at	a	compounded	annual	growth	rate	of	38%	since 2002.	The	vast	majority	of	this	growth	has	been	organic;	only	a	very	small	amount	of	new	revenue	occurred	as	a	result	of	the	acquisition	of	UPS	Aviation	Technologies in	2003,	MotionBased	Technologies	in	2005,	and	Dynastream	Innovations	Inc.	in	2006;	these	acquisitions	had	no	significant	impact	on	net	income	for	those	years.

Since	our	principal	locations	are	in	the	United	States,	Taiwan	and	the	U.K.,	we	experience	some	foreign	currency	fluctuations	in	our	operating	results.	The functional	currency	of	our	European	operations	is	the	U.S.	dollar	(effective	in	2001)	and	the	functional	currency	of	our	Asian	operations	is	the	New	Taiwan	Dollar.	Less than	15	percent	of	transactions	of	our	European	operations	are	now	denominated	in	British	Pounds	Sterling	or	the	Euro.	We	experienced	$0.6	million,	$15.3	million, $(24.8)	million,	$(6.7)	million,	and	$0.0	million	in	foreign	currency	gains	(losses)	during	fiscal	years	2006,	2005,	2004,	2003,	and	2002,	respectively.	To	date,	we	have not	entered	into	hedging	transactions	with	the	Euro,	the	British	Pound	Sterling	or	the	New	Taiwan	Dollar,	although	we	may	utilize	hedging	transactions	in	the	future.

# Critical	Accounting	Policies	and	Estimates

# General

Garmin's	discussion	and	analysis	of	its	financial	condition	and	results	of	operations	are	based	upon	Garmin's	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	Garmin	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,	Garmin	evaluates	its	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.	 Garmin	 bases	 its	 estimates	on	historical	 experience	 and	 on	 various	 other assumptions	that	are	believed	to	be	reasonable	under	the	circumstances,	the	results	of	which	form	the	basis	for	making	judgements	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.

# Revenue	Recognition

Garmin	records	estimated	reductions	to	revenue	for	customer	sales	programs	returns	and	incentive	offerings	including	rebates,	price	protection,	promotions	and other	volume-based	incentives.	The	reductions	to	revenue	are	based	on	estimates	and	judgements	using	historical	experience	and	expectation	of	future	conditions. Changes	in	these	estimates	could	negatively	affect	Garmin's	operating	results.	These	incentives	are	accrued	for	on	a	percentage	of	sales	basis	and	reviewed	periodically. If	market	conditions	were	to	decline,	Garmin	may	take	actions	to	increase	customer	incentive	offerings	possibly	resulting	in	an	incremental	reduction	of	revenue	at	the time	the	incentive	is	offered.

# Warranties

Garmin's	products	sold	are	generally	covered	by	a	warranty	for	periods	ranging	from	one	to	two	years.	Garmin	accrues	a	warranty	reserve	for	estimated	costs	to provide	warranty	services.	Garmin's	estimate	of	costs	to	service	its	warranty	obligations	is	based	on	historical	experience	and	expectation	of	future	conditions.	To	the extent	Garmin	experiences	increased	warranty	claim	activity	or	increased	costs	associated	with	servicing	those	claims,	its	warranty	accrual	will	increase,	resulting	in decreased	gross	profit.

# Inventory

Garmin	writes	down	its	inventory	for	estimated	obsolescence	or	unmarketable	inventory	equal	to	the	difference	between	the	cost	of	inventory	and	the	estimated market	value	based	upon	assumptions	about	future	demand	and	market	conditions.	If	actual	market	conditions	are	less	favorable	than	those	projected	by	management, additional	inventory	write-downs	may	be	required.

# Investments

Investments	are	classified	as	available	for	sale	and	recorded	at	fair	value,	and	unrealized	investment	gains	and	losses	are	reflected	in	stockholders'	equity. Investment	income	is	recorded	when	earned,	and	capital	gains	and	losses	are	recognized	when	investments	are	sold.	Investments	are	reviewed	periodically	to	determine if	they	have	suffered	an	impairment	of	value	that	is	considered	other	than	temporary.	If	investments	are	determined	to	be	impaired,	a	capital	loss	is	recognized	at	the date	of	determination.

Testing	for	 impairment	 of	 investments	 also	 requires	 significant	 management	 judgement.	The	 identification	 of	 potentially	 impaired	 investments,	 the determination	of	their	fair	value	and	the	assessment	of	whether	any	decline	in	value	is	other	than	temporary	are	the	key	judgement	elements.	The	discovery	of	new information	and	the	passage	of	time	can	significantly	change	these	judgements.	Revisions	of	impairment	judgements	are	made	when	new	information	becomes	known, and	any	resulting	impairment	adjustments	are	made	at	that	time.	The	economic	environment	and	volatility	of	securities	markets	increase	the	difficulty	of	determining	fair value	and	assessing	investment	impairment.

# Income	Taxes

Garmin	provides	deferred	tax	assets	and	liabilities	based	on	the	difference	between	the	tax	basis	of	assets	and	liabilities	and	their	carrying	amount	for	financial reporting	purposes	as	measured	by	the	enacted	tax	rates	and	laws	that	will	be	in	effect	when	the	differences	are	expected	to	reverse.	While	no	valuation	allowance	has been	recorded,	it	is	Garmin's	policy	to	record	a	valuation	allowance	to	reduce	its	deferred	tax	assets	to	an	amount	that	it	believes	is	more	likely	than	not	to	be	realized. While	Garmin	has	considered	future	taxable	income	and	ongoing	prudent	and	feasible	tax	planning	strategies	in	assessing	the	need	for	the	valuation	allowance,	in	the event	Garmin	were	to	determine	that	it	would	not	be	able	to	realize	all	or	part	of	its	net	deferred	tax	assets	in	the	future,	an	adjustment	to	the	deferred	tax	assets	would	be charged	to	income	in	the	period	such	determination	was	made.	Likewise,	should	Garmin	determine	that	it	would	be	able	to	realize	its	deferred	tax	assets	in	the	future	in excess	of	its	net	recorded	amount,	an	adjustment	to	the	deferred	tax	assets	would	increase	income	in	the	period	such	determination	was	made.

In	addition,	the	calculation	of	our	tax	liabilities	involves	dealing	with	uncertainties	in	the	application	of	complex	tax	regulations.	We	recognize	liabilities	for	tax audit	issues	in	the	U.S.	and	other	tax	jurisdictions	based	on	our	estimate	of	whether,	and	the	extent	to	which,	additional	taxes	will	be	due.	If	payment	of	these	amounts ultimately	proves	to	be	unnecessary,	the	reversal	of	the	liabilities	would	result	in	tax	benefits	being	recognized	in	the	period	when	we	determine	the	liabilities	are	no longer	necessary.	If	our	estimate	of	tax	liabilities	proves	to	be	less	than	the	ultimate	assessment,	a	further	charge	to	expense	would	result.

# Stock	Based	Compensation

Garmin	distributes	stock	options	or	stock	appreciation	rights	("SARs")	each	year	as	part	of	Garmin's	compensation	package	for	employees.	Employees	with certain	levels	of	responsibility	within	Garmin	are	eligible	for	stock	option	or	SAR	grants,	but	the	granting	of	options	or	SARs	is	at	the	discretion	of	the	Compensation Committee	of	the	Board	of	Directors	and	is	not	a	contractual	obligation.	Stock	compensation	plans	are	discussed	in	detail	in	Note	10	of	the	Notes	to	Consolidated Financial	Statements.

# Accounting	Terms	and	Characteristics

# Net	Sales

Our	net	sales	are	primarily	generated	through	sales	to	our	global	dealer	and	distributor	network	and	to	original	equipment	manufacturers.	We	recognize	sales when	title	of	the	products	passes	to	the	customer,	generally	at	the	time	products	are	shipped.	Our	sales	are	largely	of	a	consumer	nature;	therefore	backlog	levels	are	not necessarily	indicative	of	our	future	sales	results.	We	aim	to	achieve	a	quick	turnaround	on	orders	we	receive,	and	we	typically	ship	most	orders	within	72	hours.

Net	sales	are	subject	to	some	seasonal	fluctuation.	Typically,	sales	of	our	consumer	products	are	highest	in	the	second	quarter,	due	to	increased	demand	during the	spring	and	summer	marine	season,	and	in	the	fourth	quarter,	due	to	increased	demand	during	the	holiday	buying	season.	Our	aviation	products	do	not	experience much	seasonal	variation,	but	are	more	influenced	by	the	timing	of	the	release	of	new	products	when	the	initial	demand	is	typically	the	strongest.

# Gross	Profit

Raw	material	costs	are	our	most	significant	component	of	cost	of	goods	sold.	In	 the	first	half	of	2006,	we	experienced	meaningful	price	declines	on	flash memory	and	color	screens,	which	allowed	us	to	hold	margins	in	our	auto/mobile	segment	steady	in	the	face	of	price	declines,	and	allowed	us	to	improve	margins	in	other business	segments	as	well.	While	these	price	declines	did	not	continue	throughout	all	of	2006,	we	did	have	additional	component	cost	reductions	as	we	neared	year	end. In	2005	we	experienced	a	shift	in	product	mix	to	lower-margin	product	groups,	which	continued	in	2006,	and	price	declines	related	to	increased	competition,	both	in relation	to	the	rapidly	growing	automotive	navigation	product	line.	We	experienced	shortages	in	certain	high	technology	components	in	early	2004	as	well	as	upward pricing	pressure	on	components	in	the	first	half	of	2004,	much	of	which	was	alleviated	by	the	end	of	the	fiscal	year.

Our	existing	practice	of	performing	the	design	and	manufacture	of	our	products	in-house	has	enabled	us	to	utilize	alternative	lower	cost	components	from different	suppliers	and,	where	possible,	to	redesign	our	products	to	permit	us	to	use	these	lower	cost	components.	We	believe	that	because	of	our	practice	of	performing the	design,	manufacture	and	marketing	of	our	products	in-house,	our	Shijr,	Taiwan,	Jhongli,	Taiwan,	Olathe,	Kansas,	and	Salem,	Oregon	manufacturing	 plants	have experienced	relatively	low	costs	of	manufacturing.	In	general,	products	manufactured	in	Taiwan	have	been	our	highest	volume	products.	Our	manufacturing	labor	costs historically	have	been	lower	in	Taiwan	than	in	Olathe	and	Salem.

Sales	price	variability	has	had	and	can	be	expected	to	have	an	effect	on	our	gross	profit.	In	the	past,	prices	of	our	devices	sold	into	the	automotive/mobile market	have	declined	due	to	market	pressures	and	introduction	of	new	products	sold	at	lower	price	points.	The	average	selling	prices	of	our	aviation	products	have increased	due	to	product	mix	and	the	introduction	of	more	advanced	products	sold	at	higher	prices.	The	effect	of	the	sales	price	variability	inherent	within	the	mix	of GPS-enabled	products	sold	could	have	a	significant	impact	on	our	gross	profit.

# Selling,	General	and	Administrative	Expenses

Our	selling,	general	and	administrative	expenses	consist	primarily	of:

· salaries	for	sales	and	marketing	personnel;

· salaries	and	related	costs	for	executives	and	administrative	personnel;

· advertising,	marketing,	and	other	brand	building	costs;

· accounting	and	legal	costs;

· information	systems	and	infrastructure	costs;

· travel	and	related	costs;	and

· occupancy	and	other	overhead	costs.

With	the	expected	increase	of	total	revenues	in	the	future,	we	expect	selling,	general	and	administrative	expenses	to	continue	to	increase	for	the	foreseeable future.	We	 intend	 to	 increase	advertising	and	marketing	expenses	 in	order	 to	focus	on	individual	markets	and	build	 increased	brand	awareness	 in	 the	consumer marketplace,	especially	as	we	continue	to	develop	new	markets	and	expand	opportunities	in	rapidly	growing	markets	like	portable	automobile	navigation,	which	is becoming	a	mass	market.	We	also	intend	to	increase	our	customer	call	center	support	as	our	business	continues	to	grow.	We	also	anticipate	increased	selling,	general, and	administrative	costs	associated	with	information	technology	staffing	and	support	activities.

The	majority	of	our	research	and	development	costs	represent	salaries	for	our	engineers,	costs	for	high	technology	components	used	in	product	and	prototype development,	and	costs	of	test	equipment	needed	during	product	development.	Approximately	82%	of	the	research	and	development	of	our	products	is	performed	in	the United	States.	The	remainder	of	our	research	and	development	activities	are	performed	by	our	Taiwan	engineering	group,	which	has	increased	in	size	in	recent	years.

We	are	committed	to	increasing	the	level	of	innovative	design	and	development	of	new	products	as	we	strive	for	expanded	ability	to	serve	our	existing consumer	and	aviation	markets	as	well	as	new	markets	for	GPS-enabled	devices.	We	continue	to	grow	our	research	and	development	budget	in	absolute	terms.

# Customers

No	customer	accounted	for	10%	or	more	of	our	sales	in	the	year	ended	December	30,	2006.	Our	top	ten	customers	have	contributed	between	25%	and	37%	of net	sales	since	2001.	We	have	experienced	average	sales	days	in	our	customer	accounts	receivable	of	between	35	and	62	days	since	2001.	The	average	sales	days	in	our customer	accounts	receivable	was	62	days	as	of	December	30,	2006.	We	have	experienced	an	increase	in	the	level	of	customer	accounts	receivable	days	due	to	changes in	product	mix	and	longer	payment	terms,	and	anticipate	maintaining	approximately	the	current	level	of	accounts	receivable	days	going	forward.

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,	 lower	 marginal	 tax	 rates	 and	 substantial	 tax	 incentives	offered	 by	 the	 Taiwanese	 government	 on	 certain	 high-technology	 capital investments,	and	other	Taiwan	tax	credits	due	to	repatriation	of	2006	earnings	have	continued	to	reduce	our	tax	rate	there.	Therefore,	profits	earned	in	Taiwan	have	been taxed	at	a	lower	rate	than	those	in	the	United	States	and	Europe.	As	a	result,	our	consolidated	effective	tax	rate	was	approximately	13.5	percent	during	2006.	We	have taken	advantage	of	the	tax	benefit	in	Taiwan	since	our	inception	and	we	expect	to	continue	to	benefit	from	lower	effective	tax	rates	at	least	through	2011.	The	current Taiwan	tax	incentives	for	which	Garmin	has	received	approval	will	end	in	2011.	We	plan	on	applying	for	additional	incentives	for	years	beyond	2011	based	on	capital investments	we	expect	to	make	in	the	future.	However,	there	can	be	no	assurance	that	such	tax	incentives	will	be	available	indefinitely	or	that	we	will	receive	the incentives	for	which	we	apply.	Management	also	believes	that	the	revenue	shift	to	our	lower-tax	rate	corporate	entities	will	continue,	however	certain	tax	credits	will	not be	available	in	2007,	so	the	effective	tax	rate	for	fiscal	2007	is	expected	to	be	slightly	higher	than	fiscal	2006.	The	actual	effective	tax	rate	will	be	dependent	upon	the production	volume,	additional	capital	investments	made	during	fiscal	2007,	and	the	composition	of	our	earnings.

# Results	of	Operations

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

|  | Dec.	30, | Dec.	31, | Dec.	25, |
| :--- | :--- | :--- | :--- |
|  | 2006 | 2005 | 2004 |
| Net\tsales | 100.0% | 100.0% | 100.0% |
| Cost\tof\tgoods\tsold | 50.3% | 47.9% | 46.1% |
| Gross\tprofit | 49.7% | 52.1% | 53.9% |
| Operating\texpenses: |  |  |  |
| \t\t\t\t\t\t\tSelling,\tgeneral\tand\tadministrative | 12.1% | 11.9% | 10.4% |
| \t\t\t\t\t\t\tResearch\tand\tdevelopment | 6.4% | 7.3% | 8.0% |
| Total\toperating\texpenses | 18.5% | 19.2% | 18.4% |
| Operating\tincome | 31.2% | 32.9% | 35.5% |
| Other\tincome\t/\t(expense)\t,\tnet | 2.3% | 3.3% | (2.0%) |
| Income\tbefore\tincome\ttaxes | 33.5% | 36.2% | 33.5% |
| Provision\tfor\tincome\ttaxes | 4.5% | 6.0% | 6.5% |
| Net\tincome | 29.0% | 30.2% | 27.0% |

The	following	table	sets	forth	our	results	of	operations	through	income	before	income	taxes	for	each	of	our	four	segments	during	the	period	shown.	For	each line	item	in	the	table	the	total	of	the	segments'	amounts	equals	the	amount	in	the	consolidated	statements	of	income	data	included	in	Item	6.

| Fiscal	year	ended	December	30,	2006 | Outdoor/<br>Fitness | Marine | Automotive/<br>Mobile | Aviation |
| :--- | :--- | :--- | :--- | :--- |
| Net\tsales | $285,362 | $166,639 | $1,089,093 | $232,906 |
| Cost\tof\tgoods\tsold | 121,724 | 73,687 | 613,902 | 82,301 |
| Gross\tprofit | 163,638 | 92,952 | 475,191 | 150,605 |
| Research\tand\tdevelopment | 16,697 | 13,121 | 37,125 | 46,371 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 30,176 | 19,307 | 145,113 | 19,917 |
| Total\texpenses | 46,873 | 32,428 | 182,238 | 66,288 |
| Operating\tincome | 116,765 | 60,524 | 292,953 | 84,317 |
| Other\tincome\t/\t(expense),\tnet | 4,140 | 4,563 | 29,468 | 1,824 |
| Income\tbefore\tincome\ttaxes | $120,905 | $65,087 | $322,421 | $86,141 |

| Fiscal	year	ended	December	31,	2005 | Outdoor/<br>Fitness | Marine | Automotive/<br>Mobile | Aviation |
| :--- | :--- | :--- | :--- | :--- |
| Net\tsales | $236,936 | $158,262 | $403,417 | $229,158 |
| Cost\tof\tgoods\tsold | 112,145 | 77,311 | 225,779 | 77,468 |
| Gross\tprofit | 124,791 | 80,951 | 177,638 | 151,690 |
| Research\tand\tdevelopment | 14,873 | 8,137 | 17,466 | 34,403 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 25,675 | 19,382 | 55,125 | 21,839 |
| Total\texpenses | 40,548 | 27,519 | 72,591 | 56,242 |
| Operating\tincome | 84,243 | 53,432 | 105,047 | 95,448 |
| Other\tincome\t/\t(expense),\tnet | 6,694 | 3,188 | 20,492 | 4,056 |
| Income\tbefore\tincome\ttaxes | $90,937 | $56,620 | $125,539 | $99,504 |

| Fiscal	year	ended	December	25,	2004 | Outdoor/<br>Fitness | Marine | Automotive/<br>Mobile | Aviation |
| :--- | :--- | :--- | :--- | :--- |
| Net\tsales | $222,042 | $165,510 | $203,471 | $171,526 |
| Cost\tof\tgoods\tsold | 103,106 | 75,817 | 107,881 | 64,506 |
| Gross\tprofit | 118,936 | 89,693 | 95,590 | 107,020 |
| Research\tand\tdevelopment | 12,589 | 8,309 | 10,785 | 29,897 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 21,717 | 18,074 | 21,151 | 18,049 |
| Total\texpenses | 34,306 | 26,383 | 31,936 | 47,946 |
| Operating\tincome | 84,630 | 63,310 | 63,654 | 59,074 |
| Other\tincome\t/\t(expense),\tnet | (6,221) | (1,432) | (7,614) | (190) |
| Income\tbefore\tincome\ttaxes | $78,409 | $61,878 | $56,040 | $58,884 |

# Comparison	of	Fiscal	Years	Ended	December	30,	2006	and	December	31,	2005

|  | Fiscal	year	ended |  | Fiscal	year	ended |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | December\t30,\t2006 | December\t30,\t2006 | December\t31,\t2005 | December\t31,\t2005 | Year\tover\tYear | Year\tover\tYear |
|  | Net\tSales | %\tof\tRevenues | Net\tSales | %\tof\tRevenues | $\tChange | %\tChange |
| Outdoor/Fitness | $285,362 | 16.1% | $236,936 | 23.1% | $48,426 | 20.4% |
| Marine | 166,639 | 9.4% | 158,262 | 15.4% | 8,377 | 5.3% |
| Automotive/Mobile | 1,089,093 | 61.4% | 403,417 | 39.2% | 685,676 | 170.0% |
| Aviation | 232,906 | 13.1% | 229,158 | 22.3% | 3,748 | 1.6% |
| Total | $1,774,000 | 100.0% | $1,027,773 | 100.0% | $746,227 | 72.6% |

The	increase	in	total	net	sales	during	fiscal	2006	was	primarily	due	to	the	introduction	of	over	70	new	products	and	overall	demand	for	our	automotive	and outdoor/fitness	products.	Total	units	sold	increased	78%	to	5,400,000	in	2006	from	3,028,000	in	2005.	In	general,	management	believes	that	continuous	innovation	and the	introduction	of	new	products	are	essential	for	future	revenue	growth.

Garmin's	revenues	are	normally	seasonal,	with	the	fiscal	second	and	fourth	quarter	revenues	being	meaningfully	higher	than	the	first	and	third	fiscal	quarters.	In 2006	revenues	followed	this	typical	seasonal	pattern,	with	increases	each	quarter	over	the	prior	year's	quarter	due	to	the	impact	of	new	product	releases	across	all product	lines.	The	revenue	increase	in	the	second	quarter	was	primarily	attributable	to	sell-in	of	popular	new	portable	automobile	navigation	and	outdoor/fitness	products and	Father's	Day/graduation	purchases.	The	revenue	increase	in	the	fourth	quarter	was	primarily	attributable	to	late	summer	new	product	releases	and	sales	associated with	the	traditional	holiday	selling	season.	Revenues	can	also	be	impacted	in	any	given	quarter	by	the	timing	of	new	product	introductions.

The	increase	in	net	sales	to	consumers	was	primarily	due	to	the	introduction	of	many	new	automotive,	outdoor/fitness,	and	marine	products	and	overall	demand for	our	automotive	and	outdoor/fitness	products.	It	is	management's	belief	that	the	continued	demand	for	the	Company's	automotive	products	is	due	to	overall	increased consumer	awareness	of	the	capabilities	and	applications	of	GPS,	particularly	as	those	capabilities	pertain	to	automobile	navigation.	Additionally,	the	expansion	of	the GPS	market	in	general,	as	well	as	enhanced	feature	sets	in	our	products	specifically,	have	added	to	our	growth.	The	increase	in	aviation	sales	for	fiscal	2006	was primarily	due	to	increased	sales	from	panel	mount	products	sold	into	the	OEM	(original	equipment	manufacturers)	and	retrofit	markets.	Sales	of	the	G1000	integrated glass	cockpit	were	the	primary	reason	for	increased	OEM	sales	in	2006.	While	Temporary	Flight	Restrictions	(TFR's)	continue	to	impact	general	aviation,	the	flying community	is	adapting	to	these	changes	and	returning	to	the	skies	in	greater	numbers.	Should	the	Federal	Aviation	Administration	(FAA)	impose	more	restrictions,	 or elect	to	shutdown	U.S.	airspace	in	the	future,	these	factors	could	have	a	material	adverse	effect	on	our	business.

|  | Fiscal	year	ended	December	30,<br>2006 | Fiscal	year	ended	December	30,<br>2006 | Fiscal	year	ended	December	31,<br>2005 | Fiscal	year	ended	December	31,<br>2005 | Year	over	Year | Year	over	Year |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Gross\tProfit | %\tof\tRevenues | Gross\tProfit | %\tof\tRevenues | $\tChange | %\tChange |
| Outdoor/Fitness | $163,638 | 57.3% | $124,791 | 52.7% | $38,847 | 31.1% |
| Marine | 92,952 | 55.8% | 80,951 | 51.2% | 12,001 | 14.8% |
| Automotive/Mobile | 475,191 | 43.6% | 177,638 | 44.0% | 297,553 | 167.5% |
| Aviation | 150,605 | 64.7% | 151,690 | 66.2% | (1,085) | -0.7% |
| Total | $882,386 | 49.7% | $535,070 | 52.1% | $347,316 | 64.9% |

The	increase	 in	 gross	 profit	 dollars	 was	 primarily	 attributable	 to	 the	 introduction	of	 over	 70	 new	 products	 and	 strong	 demand	 for	 our	 automotive	 and outdoor/fitness	products.	The	reduction	in	gross	margin	percentage	was	primarily	due	to	the	strong	growth	experienced	in	our	lower-margin	automotive/mobile	product line,	offset	to	some	extent	by	strong	gross	margins	in	our	other	three	segments.	Notably	gross	margin	in	our	automotive/mobile	segment	did	not	fall	as	much	as anticipated	due	to	better	than	anticipated	raw	material	cost	reductions,	volume	discounts	on	certain	components,	less	price	competition	than	anticipated,	and	new "premium"	feature-rich	products	with	higher	selling	prices	and	margins.	Management	believes	that	the	trend	to	lower	gross	margin	percentages	will	continue	in	the future	as	net	sales	of	automotive	products	increase	at	a	faster	rate	than	the	other	business	segments.	The	decline	in	aviation	gross	margin	was	primarily	due	to	a	shift	in product	mix	within	our	OEM	and	retrofit	products	and	the	delay	of	some	anticipated	OEM	and	retrofit	products.

|  | Fiscal	year	ended	December	30, |  | Fiscal	year	ended	December	31, | Fiscal	year	ended	December	31, |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2006 | 2006 | 2005 | 2005 | Year\tover\tYear | Year\tover\tYear |
|  | Selling,\tGeneral |  | Selling,\tGeneral |  |  |  |
|  | &amp; |  | &amp; |  |  |  |
|  | Admin. |  | Admin. |  |  |  |
|  | Expenses | %\tof\tRevenues | Expenses | %\tof\tRevenues | $\tChange | %\tChange |
| Outdoor/Fitness | $30,176 | 10.6% | $25,675 | 10.8% | $4,501 | 17.5% |
| Marine | 19,307 | 11.6% | 19,382 | 12.2% | (75) | -0.4% |
| Automotive/Mobile | 145,113 | 13.3% | 55,125 | 13.7% | 89,988 | 163.2% |
| Aviation | 19,917 | 8.6% | 21,839 | 9.5% | (1,922) | -8.8% |
| Total | $214,513 | 12.1% | $122,021 | 11.9% | $92,492 | 75.8% |

The	increase	in	expense	was	primarily	attributable	to	increases	in	employment	generally	across	the	organization,	significantly	increased	advertising	costs	(up 93%)	associated	primarily	with	mass-market	advertising	to	increase	brand	awareness	and	promote	our	automotive	products,	increased	information	technology	staffing and	support	costs,	increased	staffing	in	our	sales	and	marketing	group	to	increase	focus	on	specific	target	markets,	and	additional	staffing	in	our	customer	call	center. Management	expects	that	because	of	strong	demand	for	our	products,	selling,	general	and	administrative	expenses	will	rise	in	absolute	dollars	but	decline	as	a	percentage of	sales	during	fiscal	2007	as	increased	advertising	and	marketing	activities	build	awareness	of	the	Garmin	brand	and	demand	for	Garmin	products	worldwide.

# Research	and	Development	Expenses

|  | Fiscal	year	ended	December	30,<br>2006 | Fiscal	year	ended	December	30,<br>2006 | Fiscal	year	ended	December	31,<br>2005 | Fiscal	year	ended	December	31,<br>2005 | Year	over	Year | Year	over	Year |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Research\t&amp; |  | Research\t&amp; |  |  |  |
|  | Development | %\tof\tRevenues | Development | %\tof\tRevenues | $\tChange | %\tChange |
| Outdoor/Fitness | $16,697 | 5.9% | $14,873 | 6.3% | $1,824 | 12.3% |
| Marine | 13,121 | 7.9% | 8,137 | 5.1% | 4,984 | 61.2% |
| Automotive/Mobile | 37,125 | 3.4% | 17,466 | 4.3% | 19,659 | 112.6% |
| Aviation | 46,371 | 19.9% | 34,403 | 15.0% | 11,968 | 34.8% |
| Total | $113,314 | 6.4% | $74,879 | 7.3% | $38,435 | 51.3% |

The	increase	in	research	and	development	expense	was	primarily	attributable	to	the	addition	of	over	250	associates	to	our	research	and	development	team during	fiscal	2006.	Management	believes	that	one	of	the	key	strategic	initiatives	for	future	growth	and	success	of	Garmin	is	continuous	innovation,	development,	and introduction	of	new	products.	Management	expects	that	its	research	and	development	expenses	will	increase	approximately	25%	-	30%	during	fiscal	2007	on	an	absolute dollar	basis	due	to	the	anticipated	introduction	of	a	strong	portfolio	of	new	products	slated	for	fiscal	2007.	Management	expects	to	continue	to	invest	in	the	research	and development	of	new	products	and	technology	in	order	to	maintain	Garmin's	competitive	advantage	in	the	markets	in	which	it	competes.

# Other	Income	(Expense)

|  | Fiscal	year	ended | Fiscal	year	ended |
| :--- | :--- | :--- |
|  | December\t30,\t2006 | December\t31,\t2005 |
| Interest\tincome | $35,897 | $19,586 |
| Interest\texpense | (41) | (48) |
| Foreign\tcurrency\tgain | 596 | 15,265 |
| Other | 3,543 | (373) |
| Total | $39,995 | $34,430 |

Other	income	(expense)	principally	consists	of	interest	income,	interest	expense	and	foreign	currency	exchange	gains	and	losses.	Other	income	(expense)	was higher	in	fiscal	2006	relative	to	fiscal	2005,	with	the	majority	of	this	difference	caused	by	increased	interest	income	in	2006.	Interest	income	for	fiscal	2006	increased	due to	higher	interest	rates	and	larger	cash	and	marketable	securities	balances	during	the	year,	increasing	the	returns	on	the	Company's	cash	and	cash	equivalents.

During	fiscal	2006,	the	Company	experienced	foreign	currency	exchange	gains	of	$0.6	million,	although	the	U.S.	Dollar	weakened	slightly	versus	the	Taiwan Dollar	and	British	Pound	($32.60	TD/USD	and	$0.51	GBP/USD)	relative	to	the	end	of	fiscal	2005	($32.84	TD/USD	and	$0.58	GBP/USD).	During	fiscal	2005,	the Company	experienced	foreign	currency	exchange	gains	of	$15.3	million,	as	the	U.S.	Dollar	strengthened	versus	the	Taiwan	Dollar	and	British	Pound	($32.84	TD/USD and	$0.58	GBP/USD)	relative	to	the	end	of	fiscal	2004	(32.19	TD/USD	and	$0.52	GBP/USD).

# Income	Tax	Provision

Income	tax	expense	increased	by	$19.0	million,	to	$80.4,	for	fiscal	year	2006	from	$61.4	million	for	fiscal	year	2005,	due	to	our	higher	taxable	income.	The effective	tax	rate	was	13.5%	for	fiscal	2006	versus	16.5%	for	fiscal	2005.	The	decrease	in	tax	rate	is	due	to	additional	tax	benefits	received	from	Taiwan	as	a	result	of	our continued	capital	investment	in	our	manufacturing	facilities	in	Taiwan,	tax	credits	resulting	from	our	decision	to	repatriate	certain	of	our	Taiwan	earnings	to	our	parent company,	and	the	increased	contribution	to	our	income	from	lower	tax	jurisdictions	during	2006	relative	to	2005.	This	lower	effective	tax	rate	resulted	in	a	decrease	in the	ratio	of	income	tax	as	a	percentage	of	revenue	of	approximately	1.4%	from	fiscal	2005	to	fiscal	2006.

# Net	Income

As	a	result	of	the	various	factors	noted	above,	net	income	increased	65%	to	$514.1	million	for	fiscal	year	2006	compared	to	$311.2	million	for	fiscal	year	2005.

# Comparison	of	Fiscal	Years	Ended	December	31,	2005	and	December	25,	2004

|  | Fiscal	year	ended	December	31,<br>2005 | Fiscal	year	ended	December	31,<br>2005 | Fiscal	year	ended	December	25,<br>2004 | Fiscal	year	ended	December	25,<br>2004 | Year	over	Year | Year	over	Year |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Net\tSales | %\tof\tRevenues | Net\tSales | %\tof\tRevenues | $\tChange | %\tChange |
| Outdoor/Fitness | $236,936 | 23.1% | $222,042 | 29.1% | $14,894 | 6.7% |
| Marine | 158,262 | 15.4% | 165,510 | 21.7% | (7,248) | -4.4% |
| Automotive/Mobile | 403,417 | 39.2% | 203,471 | 26.7% | 199,946 | 98.3% |
| Aviation | 229,158 | 22.3% | 171,526 | 22.5% | 57,632 | 33.6% |
| Total | $1,027,773 | 100.0% | $762,549 | 100.0% | $265,224 | 34.8% |

The	increase	in	total	net	sales	during	fiscal	2005	was	primarily	due	to	the	introduction	of	over	50	new	products	and	overall	demand	for	our	automotive	and aviation	products.	Total	units	sold	increased	31%	to	3,028,000	in	2005	from	2,306,000	in	2004.	In	general,	management	believes	that	continuous	innovation	and	the introduction	of	new	products	are	essential	for	future	revenue	growth.

The	Company's	revenues	are	normally	seasonal,	with	the	fiscal	second	and	fourth	quarter	revenues	meaningfully	higher	than	the	first	and	third	fiscal	quarters. In	2005	revenues	followed	this	typical	seasonal	pattern,	with	increases	each	quarter	over	the	prior	year's	quarter	due	to	the	impact	of	new	product	releases	across	all product	lines.

The	revenue	increase	in	second	quarter	was	primarily	attributable	to	initial	sell-in	of	popular	new	portable	automobile	navigation	products,	the	onset	of	the marine	selling	season,	and	Father's	Day	purchases.	The	revenue	increase	in	the	fourth	quarter	was	primarily	attributable	to	sales	momentum	in	our	automotive	products segment,	new	product	releases,	and	sales	associated	with	the	traditional	holiday	selling	season.	The	increase	in	aviation	sales	for	fiscal	2005	was	primarily	due	to increased	sales	from	panel	mount	products	sold	into	the	OEM	(original	equipment	manufacturers)	and	retrofit	markets.	Sales	of	the	G1000	integrated	glass	cockpit	was the	primary	reason	for	increased	OEM	sales	in	2005.	While	Temporary	Flight	Restrictions	(TFR's)	continue	to	impact	general	aviation,	the	flying	community	is	adapting to	these	changes	and	returning	to	the	skies	in	greater	numbers.	Should	the	Federal	Aviation	Administration	(FAA)	impose	 more	restrictions,	or	elect	to	shutdown	U.S. airspace	in	the	future,	these	factors	could	have	a	material	adverse	effect	on	our	business.

Revenues	can	also	be	impacted	in	any	given	quarter	by	the	timing	of	new	product	introductions.	It	is	management's	belief	that	the	continued	demand	for Garmin's	products	is	due	to	the	expansion	of	 the	GPS	market	 in	general,	and	overall	increased	consumer	awareness	of	the	capabilities	and	applications	of	GPS, particularly	as	those	capabilities	pertain	to	automobile	navigation.

|  | Fiscal	year	ended	December	31,<br>2005 | Fiscal	year	ended	December	31,<br>2005 | Fiscal	year	ended	December	25,<br>2004 | Fiscal	year	ended	December	25,<br>2004 | Year	over	Year | Year	over	Year |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Gross\tProfit | %\tof\tRevenues | Gross\tProfit | %\tof\tRevenues | $\tChange | %\tChange |
| Outdoor/Fitness | $124,791 | 52.7% | $118,936 | 53.6% | $5,855 | 4.9% |
| Marine | 80,951 | 51.2% | 89,693 | 54.2% | (8,742) | -9.7% |
| Automotive/Mobile | 177,638 | 44.0% | 95,590 | 47.0% | 82,048 | 85.8% |
| Aviation | 151,690 | 66.2% | 107,020 | 62.4% | 44,670 | 41.7% |
| Total | $535,070 | 52.1% | $411,239 | 53.9% | $123,831 | 30.1% |

The	increase	in	gross	profit	dollars	was	primarily	attributable	to	the	introduction	of	over	50	new	products	and	overall	demand	for	our	marine,	outdoor/fitness, automotive/mobile,	and	aviation	products.	The	reduction	in	gross	margin	percentage	was	primarily	due	to	reduced	prices	on	older	marine	and	outdoor/fitness	products	in advance	of	new	product	releases,	and	a	shift	in	product	mix	towards	the	faster-growing,	lower-margin	automotive/mobile	product	line.	The	increase	in	aviation	gross margin	was	primarily	due	to	a	shift	in	product	mix	within	our	OEM	and	retrofit	products,	as	the	G1000	product	line	began	a	second	year	of	selling	into	new	aircraft	and program	costs	were	no	longer	a	significant	cost	in	this	business	segment.

|  | Fiscal	year	ended	December	31, | Fiscal	year	ended	December	31, | Fiscal	year	ended	December	25, | Fiscal	year	ended	December	25, |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2005 | 2005 | 2004 | 2004 | Year\tover\tYear | Year\tover\tYear |
|  | Selling,\tGeneral |  | Selling,\tGeneral |  |  |  |
|  | &amp; |  | &amp; |  |  |  |
|  | Admin. |  | Admin. |  |  |  |
|  | Expenses | %\tof\tRevenues | Expenses | %\tof\tRevenues | $\tChange | %\tChange |
| Outdoor/Fitness | $25,675 | 10.8% | $21,717 | 9.8% | $3,958 | 18.2% |
| Marine | 19,382 | 12.2% | 18,074 | 10.9% | 1,308 | 7.2% |
| Automotive/Mobile | 55,125 | 13.7% | 21,151 | 10.4% | 33,974 | 160.6% |
| Aviation | 21,839 | 9.5% | 18,049 | 10.5% | 3,790 | 21.0% |
| Total | $122,021 | 11.9% | $78,991 | 10.4% | $43,030 | 54.5% |

The	increase	in	expense	was	primarily	attributable	to	increases	in	employment	generally	across	the	organization	(net	increase	of	over	400	non-engineering employees),	significantly	increased	advertising	costs	(up	101%)	associated	primarily	with	increasing	Garmin	brand	awareness	and	promotion	of	automotive	products, increased	information	technology	staffing	and	support	costs,	increased	staffing	in	our	sales	and	marketing	group	to	increase	focus	on	specific	target	markets,	and additional	staffing	in	our	customer	call	center.

|  | Fiscal	year	ended	December	31,<br>2005 | Fiscal	year	ended	December	31,<br>2005 | Fiscal	year	ended	December	25,<br>2004 | Fiscal	year	ended	December	25,<br>2004 | Year	over	Year | Year	over	Year |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Research\t&amp; |  | Research\t&amp; |  |  |  |
|  | Development | %\tof\tRevenues | Development | %\tof\tRevenues | $\tChange | %\tChange |
| Outdoor/Fitness | $14,873 | 6.3% | $12,589 | 5.7% | $2,284 | 18.1% |
| Marine | 8,137 | 5.1% | 8,309 | 5.0% | (172) | -2.1% |
| Automotive/Mobile | 17,466 | 4.3% | 10,785 | 5.3% | 6,681 | 61.9% |
| Aviation | 34,403 | 15.0% | 29,897 | 17.4% | 4,506 | 15.1% |
| Total | $74,879 | 7.3% | $61,580 | 8.1% | $13,299 | 21.6% |

The	increase	in	research	and	development	expense	was	primarily	attributable	to	the	addition	of	142	associates	to	our	research	and	development	team	during fiscal	2005.	Management	believes	that	one	of	the	key	strategic	initiatives	for	future	growth	and	success	of	the	Company	is	continuous	innovation,	development,	and introduction	of	new	products,	and	this	requires	strong	support	of	our	research	and	development	activities.

|  | Fiscal	year	ended | Fiscal	year	ended |
| :--- | :--- | :--- |
|  | December\t31,\n2005 | December\t25,\n2004 |
| Interest\tincome | $19,586 | $9,419 |
| Interest\texpense | (48) | (38) |
| Foreign\tcurrency\tgain\t/\t(loss) | 15,265 | (24,819) |
| Other | (373) | (19) |
| Total | $34,430 | ($15,457) |

Other	income	(expense)	principally	consists	of	interest	income,	interest	expense	and	foreign	currency	exchange	gains	and	losses.	Other	income	(expense)	was significantly	higher	in	fiscal	2005	relative	to	fiscal	2004,	with	the	majority	of	this	difference	caused	by	increased	interest	income	and	foreign	currency	gains	in	2005. Interest	income	for	fiscal	2005	increased	due	to	higher	interest	rates	and	larger	cash	and	marketable	securities	balances	during	the	year,	increasing	the	returns	on	the Company's	cash	and	cash	equivalents.

During	fiscal	2005,	the	Company	experienced	foreign	currency	exchange	gains	of	$15.3	million,	as	the	U.S.	Dollar	strengthened	versus	the	Taiwan	Dollar	and British	Pound	and	$0.52	GBP/USD	($32.84	TD/USD	and	$0.58	GBP/USD)	relative	to	the	end	of	fiscal	2004	(32.19	TD/USD	and	$0.52	GBP/USD).	During	fiscal	2004, the	Company	experienced	foreign	currency	exchange	losses	of	$24.8	million,	as	the	U.S.	Dollar	weakened	versus	the	Taiwan	Dollar	and	British	Pound	(32.19	TD/USD and	$0.52	GBP/USD)	relative	to	the	end	of	fiscal	2003	(34.05	TD/USD	and	$0.56	GBP/USD).

Income	tax	expense	increased	by	$11.9	million,	to	$61.4	million,	for	fiscal	year	2005	from	$49.5	million	for	fiscal	year	2004	due	to	our	higher	taxable	income. The	effective	tax	rate	was	16.5%	for	fiscal	2005	versus	19.4%	for	fiscal	2004.	The	decrease	in	tax	rate	was	due	to	additional	tax	benefits	received	from	Taiwan	as	a	result of	our	continued	capital	investment	in	our	manufacturing	facilities	in	Taiwan,	tax	credits	resulting	from	our	decision	to	repatriate	certain	of	our	Taiwan	earnings	to	our parent	company,	and	the	increased	contribution	to	our	income	from	lower	tax	jurisdictions	during	2005	relative	to	2004.	This	lower	effective	tax	rate	resulted	in	a decrease	in	the	ratio	of	income	tax	as	a	percentage	of	revenue	of	approximately	0.5%	from	fiscal	2004	to	fiscal	2005.

As	a	result	of	the	various	factors	noted	above,	net	income	increased	51%	to	$311.2	million	for	fiscal	year	2005	compared	to	$205.7	million	for	fiscal	year	2004

# Liquidity	and	Capital	Resources

Net	cash	generated	by	operations	was	$361.9	million,	$247.0	million,	and	$208.9	million	for	fiscal	years	2006,	2005,	and	2004,	respectively.	We	operate	with	a customer-oriented	approach	and	seek	to	maintain	sufficient	inventory	to	meet	customer	demand.	Because	we	desire	to	respond	quickly	to	our	customers	and	minimize order	 fulfillment	 time,	 our	 inventory	 levels	 are	 generally	 substantial	enough	 to	 meet	 most	 demand.	 We	 also	 attempt	 to	 carry	 sufficient	 inventory	levels	of	 key components	so	that	potential	supplier	shortages	have	as	minimal	an	impact	as	possible	on	our	ability	to	deliver	our	finished	products.	We	significantly	increased	our	raw material	and	finished	goods	inventories	in	the	third	quarter	of	2006	in	anticipation	of	a	strong	demand	for	our	products	during	the	holiday	season,	and	returned	them	to more	normal	levels	by	the	end	of	the	fourth	quarter.	We	prefer	to	have	sufficient	finished	goods	on	hand	to	meet	anticipated	demand	for	our	products.	Raw	materials	and finished	goods	inventory	levels	continued	to	grow	year	over	year	as	a	function	of	our	growing	sales.	We	anticipate	days	of	inventory	to	stabilize	at	current	levels	in	2007 although	absolute	dollars	of	inventory	will	continue	to	rise,	reflecting	the	growth	of	our	business.

Capital	expenditures	in	2006	totaled	$92.9	million,	an	increase	of	$65.8	million	from	fiscal	2005.	This	amount	in	2006	reflects	the	purchase	and	renovation	of an	additional	manufacturing	facility	in	Jhongli,	Taiwan,	the	purchase	of	a	new	European	headquarters,	as	well	as	ordinary	capital	expenditures	for	fiscal	2006.	Capital expenditures	 in	 2005	 totaled	 $27.1	 million,	 a	 decrease	 of	 $51.0	 million	from	 fiscal	 2004.	 Capital	 expenditures	 during	 2004	 included	 the	 Olathe,	 Kansas	facility expansion.	The	amount	in	2005	reflects	normal	capital	expenditure	levels.

We	have	budgeted	approximately	$65	million	of	capital	expenditures	during	fiscal	2007	to	include	normal	ongoing	capital	expenditures	as	well	as	purchases	of production	machinery	and	equipment	to	expand	capacity	in	the	Jhongli,	Taiwan	facility.

In	addition	to	capital	expenditures,	in	2006	cash	flow	used	in	investing	related	to	the	purchase	of	Dynastream	Innovations,	Inc.	for	$36.5	million,	fixed	income securities	associated	with	the	investment	of	our	on-hand	cash	balances	and	approximately	$3.1	million	of	intangible	assets.	Garmin's	average	return	on	its	investments during	fiscal	2006	was	approximately	4.7%.	In	addition	to	capital	expenditures,	in	2005	cash	flow	used	in	investing	related	to	the	purchase	of	fixed	income	securities associated	with	the	investment	of	our	on-hand	cash	balances	and	approximately	$3.6	million	of	intangible	assets.	Garmin's	average	return	on	its	investments	during fiscal	2005	was	approximately	3.1%.	In	addition	to	capital	expenditures,	in	2004	cash	flow	used	in	investing	related	to	the	purchase	of	fixed	income	securities	associated with	the	investment	of	our	on-hand	cash	balances	and	approximately	$1.8	million	of	intangible	assets.	Garmin's	average	return	on	its	investments	during	fiscal	year	2004 was	approximately	1.7%.	It	is	management's	goal	to	invest	the	on-hand	cash	consistent	with	Garmin'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	low credit	risk.

Cash	flow	related	to	financing	activities	resulted	in	a	net	use	of	cash	in	2006	of	$132.7	million.	During	2006,	Garmin	repurchased	1,155,300	shares	of	its common	shares	under	the	3,000,000-share	stock	repurchase	program	that	was	approved	by	the	Board	of	Directors	on	August	3,	2006	and	expires	on	December	31,	2007. Sources	and	uses	in	financing	activities	during	2006	related	primarily	to	uses	for	the	payment	of	a	dividend	($107.9	million)	and	stock	repurchase	($50.5	million),	and	a source	of	cash	from	the	issuance	of	common	stock	related	to	the	exercise	of	employee	stock	options,	the	related	tax	benefit,	and	the	employee	stock	purchase	plan ($25.7	million).	Cash	flow	related	to	financing	activities	resulted	in	a	net	use	of	cash	in	2005	of	$70.9	million.	During	2005,	Garmin	repurchased	638,000	shares	of	its common	shares	under	the	3,000,000-share	stock	repurchase	program	that	was	approved	by	the	Board	of	Directors	on	April	21,	2004	and	expired	on	April	30,	2006. Sources	and	uses	in	financing	activities	during	2005	related	primarily	to	uses	for	the	payment	of	a	dividend	($54.0	million)	and	stock	repurchase	($26.7	million),	and	a source	of	cash	from	the	issuance	of	common	shares	related	to	the	exercise	of	employee	stock	options,	the	related	tax	benefit,	and	the	employee	stock	purchase	plan	($9.7 million).	Cash	flow	related	to	financing	activities	resulted	in	a	net	use	of	cash	in	2004	of	$51.1	million.	During	2004,	Garmin	repurchased	100,000	shares	of	its	common shares	under	the	3,000,000-share	stock	repurchase	program.	Sources	and	uses	in	financing	activities	during	2004	related	primarily	to	uses	for	the	payment	of	a	dividend ($54.1	million)	and	stock	repurchase	($3.1	million),	and	a	source	of	cash	from	the	issuance	of	common	stock	related	to	the	exercise	of	employee	stock	options,	the related	tax	benefit,	and	the	employee	stock	purchase	plan	($6.1	million).

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

# Contractual	Obligations	and	Commercial	Commitments

Future	payments	due	from	Garmin,	as	of	December	30,	2006,	aggregated	by	type	of	contractual	obligation,	are:

|  |  | Less	than |  |  | More	than |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Contractual\tObligations | Total | 1\tyear | 1-3\tyears | 3-5\tyears | 5\tyears |
| Operating\tLeases | $31,145\t $ | 3,357\t $ | 6,271\t $ | 6,040\t $ | 15,477 |
| Purchase\tObligations | $265,409\t $ | 265,409\t $ | 0\t $ | 0\t $ | 0 |
| Total | $296,554\t $ | 268,766\t $ | 6,271\t $ | 6,040\t $ | 15,477 |

Operating	leases	describes	lease	obligations	associated	with	Garmin	facilities	located	in	the	U.S.,	Taiwan,	the	U.K.,	and	Canada.	Purchase	obligations	are	the aggregate	of	those	purchase	orders	that	were	outstanding	on	December	30,	2006;	these	obligations	are	created	and	then	paid	off	within	3	months	during	the	normal course	of	our	manufacturing	business.

# Off-Balance	Sheet	Arrangements

We	do	not	have	any	off-balance	sheet	arrangements.

# Item	7A.	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	materials costs	are	both	significantly	influenced	by	semiconductor	market	conditions.	Historically,	during	cyclical	industry	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	materials	costs.

# 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	Garmin's	subsidiaries	in	international	markets	results	in	exposure	to	movements	in	currency	exchange	rates.	We	generally	have	not	been significantly	affected	by	foreign	exchange	fluctuations	because	the	Taiwan	Dollar	and	British	Pound	have	proven	to	be	relatively	stable.	However,	periodically	we	have experienced	significant	foreign	currency	gains	and	losses	due	to	the	strengthening	and	weakening	of	the	U.S.	dollar.	The	potential	of	volatile	foreign	exchange	rate fluctuations	in	the	future	could	have	a	significant	effect	on	our	results	of	operations.

The	currencies	that	create	a	majority	of	the	Company's	exchange	rate	exposure	are	the	Taiwan	Dollar	and	British	Pound.	Garmin	Corporation,	located	in	Shijr, Taiwan,	uses	the	local	currency	as	the	functional	currency.	The	Company	 translates	all	assets	and	liabilities	at	year-end	exchange	rates	and	 income	and	expense accounts	at	average	rates	during	the	year.	In	order	to	minimize	the	effect	of	the	currency	exchange	fluctuations	on	our	net	assets,	we	have	elected	to	retain	most	of	our Taiwan	subsidiary's	cash	and	investments	in	marketable	securities	denominated	in	U.S.	dollars.	The	TD/USD	exchange	rate	decreased	0.7%	during	2006,	which	resulted in	a	cumulative	translation	adjustment	of	negative	$1.2	million	at	the	end	of	fiscal	2006	and	a	net	foreign	currency	loss	of	$3.1	million	at	Garmin	Corporation	during 2006.

Garmin	Europe,	located	in	Romsey,	Great	Britain,	uses	the	U.S.	Dollar	as	the	functional	currency.	However,	as	some	transactions	occur	in	British	Pounds, foreign	currency	gains	or	losses	have	been	realized	historically	and	have	become	more	significant	in	recent	years	as	Garmin	Europe	has	grown.	The	GBP/USD	exchange rate	decreased	12.3%	during	2006	and	resulted	in	a	net	foreign	currency	gain	of	$3.7	million	at	Garmin	Europe.

If	the	TD/USD	exchange	rate	had	decreased	10%	and	the	GBP/USD	exchange	rate	had	increased	10%	in	2006,	the	cumulative	translation	adjustment	would have	been	a	negative	$1.4	million	at	the	end	of	fiscal	2006	and	the	foreign	currency	loss	would	have	been	$44.7	million.	As	the	majority	of	our	worldwide	sales	are transacted	in	U.S.	Dollars,	the	impact	on	sales	related	to	foreign	currency	movements	is	minimal.

# Interest	Rate	Risk

We	have	$0.2	million	of	outstanding	long-term	debt	which	is	associated	with	the	acquisition	of	Dynastream	Innovations,	Inc.	which	will	be	eliminated	in	fiscal 2007.	Given	this	debt	amount	is	financially	immaterial	to	Garmin,	there	is	no	meaningful	debt-related	interest	rate	risk.

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.	A	hypothetical	change	of	 10%	in	interest	rates	would	not	have	a	material	effect	on	such	unrealized	gains	or losses.	At	December	30,	2006,	cumulative	unrealized	losses	on	those	securities	were	$4.7	million.

# Item	8.	Financial	Statements	and	Supplementary	Data

# CONSOLIDATED	FINANCIAL	STATEMENTS

# Garmin	Ltd.	and	Subsidiaries

| Report	of	Ernst	&amp;	Young	LLP,	Independent	Registered	Public	Accounting	Firm | 56 |
| :--- | :--- |
| Consolidated\tBalance\tSheets\tat\tDecember\t30,\t2006\tand\tDecember\t31,\t2005 | 57 |
| Consolidated\tStatements\tof\tIncome\tfor\tthe\tYears\tEnded\tDecember\t30,\t2006,\tDecember\t31,\t2005,\tand\tDecember\t25,\t2004 | 58 |
| Consolidated\tStatements\tof\tStockholders'\tEquity\tfor\tthe\tYears\tEnded\tDecember\t30,\t2006,\tDecember\t31,\t2005,\tand\tDecember\t25,\t2004 | 59 |
| Consolidated\tStatements\tof\tCash\tFlows\tfor\tthe\tYears\tEnded\tDecember\t30,\t2006,\tDecember\t31,\t2005,\tand\tDecember\t25,\t2004 | 60 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 62 |

# Report	of	Ernst	&	Young	LLP

# Independent	Registered	Public	Accounting	Firm

# The	Board	of	Directors	and	Shareholders

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Garmin	Ltd.	and	Subsidiaries	(the	Company)	as	of	December	30,	2006	and	December	31,	2005,	and the	related	consolidated	statements	of	income,	stockholders'	equity,	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	30,	2006.	Our	audits	also included	 the	 financial	 statement	 schedule	 listed	 in	 the	 index	at	Item	 15(a)(2).	 These	 financial	 statements	 and	 schedule	 are	 the	 responsibility	o f	the	 Company's management.	Our	responsibility	is	to	express	an	opinion	on	these	financial	statements	and	schedule	based	on	our	audits.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan	and perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a	test	basis, evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant	estimates made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinion.

In	our	opinion,	the	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	consolidated	financial	position	of	Garmin	Ltd.	and	Subsidiaries	at December	30,	2006	and	December	31,	2005	and	the	consolidated	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	December 30,	2006,	in	conformity	with	U.S.	generally	accepted	accounting	principles.	Also,	in	our	opinion,	the	related	financial	statement	schedule,	when	considered	in	relation	to the	basic	financial	statements	taken	as	a	whole,	presents	fairly	in	all	material	respects	the	information	set	forth	therein.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	effectiveness	of	Garmin	Ltd.	and Subsidiaries'	internal	control	over	financial	reporting	as	of	December	30,	2006,	based	on	criteria	established	in	the	Internal	Control-Integrated	Framework	issued	by	the Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	and	our	report	dated	February	27,	2007	expressed	an	unqualified	opinion	thereon.

/s/	Ernst	&	Young	LLP

# Kansas	City,	Missouri

# Consolidated	Balance	Sheets

# (In	thousands,	except	share	information)

|  | December	30,<br>2006 | December	31,<br>2005 |
| :--- | :--- | :--- |
| Assets |  |  |
| Current\tassets: |  |  |
| \t\t\t\t\t\t\tCash\tand\tcash\tequivalents | $337,321 | $334,352 |
| \t\t\t\t\t\t\tMarketable\tsecurities\t(\tNote\t4) | 73,033 | 32,050 |
| \t\t\t\t\t\t\tAccounts\treceivable,\tless\tallowance\tfor\tdoubtful\taccounts\tof |  |  |
| \t\t\t\t\t\t\t\t\t\t\t\t$5,340\tin\t2006\tand\t$4,226\tin\t2005 | 403,524 | 170,997 |
| \t\t\t\t\t\t\tInventories,\tnet | 271,008 | 199,841 |
| \t\t\t\t\t\t\tDeferred\tincome\ttaxes\t(Note\t7) | 55,996 | 29,615 |
| \t\t\t\t\t\t\tPrepaid\texpenses\tand\tother\tcurrent\tassets | 28,202 | 34,312 |
| Total\tcurrent\tassets | 1,169,084 | 801,167 |
| Property\tand\tequipment,\tnet\t(Notes\t3\tand\t5) |  |  |
| \t\t\t\t\t\t\tLand\tand\timprovements | 37,103 | 31,075 |
| \t\t\t\t\t\t\tBuilding\tand\timprovements | 158,873 | 106,470 |
| \t\t\t\t\t\t\tOffice\tfurniture\tand\tequipment | 45,841 | 33,863 |
| \t\t\t\t\t\t\tManufacturing\tequipment | 51,772 | 37,747 |
| \t\t\t\t\t\t\tEngineering\tequipment | 37,519 | 28,859 |
| \t\t\t\t\t\t\tVehicles | 8,376 | 8,494 |
|  | 339,484 | 246,508 |
| \t\t\t\t\t\t\tAccumulated\tdepreciation | 88,496 | 67,335 |
|  | 250,988 | 179,173 |
| Restricted\tcash\t(Note\t5) | 1,525 | 1,356 |
| Marketable\tsecurities\t(Note\t4) | 407,843 | 344,673 |
| License\tagreements,\tnet | 3,307 | 6,517 |
| Other\tintangible\tassets | 64,273 | 29,349 |
| Total\tassets | $1,897,020 | $1,362,235 |
| Liabilities\tand\tStockholders'\tEquity |  |  |
| Current\tliabilities: |  |  |
| \t\t\t\t\t\t\tAccounts\tpayable | $88,375 | $76,516 |
| \t\t\t\t\t\t\tSalaries\tand\tbenefits\tpayable | 16,268 | 13,005 |
| \t\t\t\t\t\t\tAccrued\twarranty\tcosts | 37,639 | 18,817 |
| \t\t\t\t\t\t\tAccrued\tsales\tprogram\tcosts | 32,560 | 9,038 |
| \t\t\t\t\t\t\tOther\taccrued\texpenses | 68,172 | 14,955 |
| \t\t\t\t\t\t\tIncome\ttaxes\tpayable | 94,668 | 63,154 |
| Total\tcurrent\tliabilities | 337,682 | 195,485 |
| Long-term\tdebt,\tless\tcurrent\tportion | 248 | - |
| Deferred\tincome\ttaxes\t(Note\t7) | 1,191 | 9,486 |
| Stockholders'\tequity: |  |  |
| \t\t\t\t\t\t\tCommon\tstock,\t$0.005\tpar\tvalue,\t1,000,000,000\tshares\tauthorized |  |  |
| \t\t\t\t\t\t\t\t\t\t\t\t(Notes\t10,\t11\tand\t12): |  |  |
| \t\t\t\t\t\t\t\t\t\t\t\t\t\t\tIssued\tand\toutstanding\tshares\t-\t216,098,000\tin\t2006,\tand |  |  |
| \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t216,134,000\tin\t2005 | 1,082 | 1,081 |
| \t\t\t\t\t\t\tAdditional\tpaid-in\tcapital | 83,438 | 96,242 |
| \t\t\t\t\t\t\tRetained\tearnings\t(Note\t3) | 1,478,654 | 1,072,454 |
| \t\t\t\t\t\t\tAccumulated\tother\tcomprehensive\tgain/(loss) | (5,275) | (12,513) |
| Total\tstockholders'\tequity | 1,557,899 | 1,157,264 |
| Total\tliabilities\tand\tstockholders'\tequity | $1,897,020 | $1,362,235 |

See	accompanying	notes.

# Consolidated	Statements	of	Income

# (In	Thousands,	Except	Per	Share	Information)

|  | December	30,<br>2006 | December	31,<br>2005 | December	25,<br>2004 |
| :--- | :--- | :--- | :--- |
| Net\tsales | $1,774,000 | $1,027,773 | $762,549 |
| Cost\t\t\tof\tgoods\tsold | 891,614 | 492,703 | 351,310 |
| Gross\tprofit | 882,386 | 535,070 | 411,239 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 214,513 | 122,021 | 78,991 |
| Research\tand\tdevelopment\texpense | 113,314 | 74,879 | 61,580 |
|  | 327,827 | 196,900 | 140,571 |
| Operating\tincome | 554,559 | 338,170 | 270,668 |
| Other\tincome\t(expense):\n\t\t\t\t\t\t\tInterest\tincome | 35,897 | 19,586 | 9,419 |
| \t\t\t\t\t\t\tInterest\texpense | (41) | (48) | (38) |
| \t\t\t\t\t\t\tForeign\tcurrency | 596 | 15,265 | (24,819) |
| \t\t\t\t\t\t\tOther | 3,543 | (373) | (19) |
|  | 39,995 | 34,430 | (15,457) |
| Income\tbefore\tincome\ttaxes | 594,554 | 372,600 | 255,211 |
| Income\ttax\tprovision\t(benefit):\t(Note\t7) |  |  |  |
| \t\t\t\t\t\t\tCurrent | 113,226 | 52,548 | 57,462 |
| \t\t\t\t\t\t\tDeferred | (32,795) | 8,833 | (7,951) |
|  | 80,431 | 61,381 | 49,511 |
| Net\tincome | $514,123 | $311,219 | $205,700 |
| Basic\tnet\tincome\tper\tshare\t(Note\t11) | $2.38 | $1.44 | $0.95 |
| Diluted\tnet\tincome\tper\tshare\t(Note\t11) | $2.35 | $1.43 | $0.94 |

# Consolidated	Statements	of	Stockholders'	Equity

(In	Thousands,	Except	Share	and	Per	Share	Information)

|  |  |  |  |  | Accumulated |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Additional |  | Other |  |
|  | Common\tStock | Common\tStock | Paid-In | Retained | Comprehensive |  |
|  | Shares | Dollars | Capital | Earnings | Gain/(Loss) | Total |
| Balance\tat\tDecember\t27,\t2003 | 216,332 | $1,082 | $104,022 | $663,604 | ($19,018) | $749,690 |
| \t\t\t\tNet\tincome | - | - | - | 205,700 |  | 205,700 |
| \t\t\t\tTranslation\tadjustment | - | - | - | - | 33,040 | 33,040 |
| \t\t\t\tAdjustment\trelated\tto\tunrealized |  |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\tgains\t(losses)\ton\tavailable-for-sale |  |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\tsecurities,\tnet\tof\tincome\ttax\teffects\n\t\t\t\t\t\t\t\t\tof\t$1,260 | - | - | - | - | (3,407) | (3,407) |
| \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tComprehensive\tincome |  |  |  |  |  | 235,333 |
| \t\t\t\tDividends\tpaid | - | - | - | (54,095) | - | (54,095) |
| \t\t\t\tTax\tbenefit\tfrom\texercise\tof\temployee\n\t\t\t\t\t\t\t\t\t\tstock\toptions | - | - | 1,980 | - | - | 1,980 |
| \t\t\t\tIssuance\tof\tcommon\tstock\tfrom\n\t\t\t\t\t\t\t\t\t\texercise\tof\tstock\toptions | 404 | 2 | 3,438 | - | - | 3,440 |
| \t\t\t\tPurchase\tand\tretirement\tof |  |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\t\tcommon\tstock | (200) | (1) | (3,181) | - | - | (3,182) |
| \t\t\t\tIssuance\tof\tcommon\tstock\tthrough\n\t\t\t\t\t\t\t\t\t\tstock\tpurchase\tplan | 118 | 1 | 2,690 | - | - | 2,691 |
| Balance\tat\tDecember\t25,\t2004 | 216,654 | $1,084 | $108,949 | $815,209 | $10,615 | $935,857 |
| \t\t\t\tNet\tincome | - | - | - | 311,219 | - | 311,219 |
| \t\t\t\tTranslation\tadjustment | - | - | - | - | (20,768) | (20,768) |
| \t\t\t\tAdjustment\trelated\tto\tunrealized |  |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\tgains\t(losses)\ton\tavailable-for-sale |  |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\tsecurities,\tnet\tof\tincome\ttax\teffects\n\t\t\t\t\t\t\t\t\tof\t$533 | - | - | - | - | (2,360) | (2,360) |
| \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tComprehensive\tincome |  |  |  |  |  | 288,091 |
| \t\t\t\tDividends\tpaid | - | - | - | (53,974) | - | (53,974) |
| \t\t\t\tTax\tbenefit\tfrom\texercise\tof\temployee\n\t\t\t\t\t\t\t\t\t\tstock\toptions | - | - | 3,328 | - | - | 3,328 |
| \t\t\t\tIssuance\tof\tcommon\tstock\tfrom |  |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\t\texercise\tof\tstock\toptions | 644 | 3 | 6,863 | - | - | 6,866 |
| \t\t\t\tStock\tappreciation\trights | - |  | 925 |  |  | 925 |
| \t\t\t\tPurchase\tand\tretirement\tof |  |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\t\tcommon\tstock | (1,276) | (7) | (26,646) | - | - | (26,653) |
| \t\t\t\tIssuance\tof\tcommon\tstock\tthrough\n\t\t\t\t\t\t\t\t\t\tstock\tpurchase\tplan | 112 | 1 | 2,823 | - | - | 2,824 |
| Balance\tat\tDecember\t31,\t2005 | 216,134 | $1,081 | $96,242 | $1,072,454 | ($12,513) | $1,157,264 |
| \t\t\t\tNet\tincome | - | - | - | 514,123 | - | 514,123 |
| \t\t\t\tTranslation\tadjustment | - | - | - | - | 7,525 | 7,525 |
| \t\t\t\tAdjustment\trelated\tto\tunrealized |  |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\tgains\t(losses)\ton\tavailable-for-sale |  |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\tsecurities,\tnet\tof\tincome\ttax\teffects\n\t\t\t\t\t\t\t\t\tof\t$355 | - | - | - | - | (287) | (287) |
| \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tComprehensive\tincome |  |  |  |  |  | 521,361 |
| \t\t\t\tDividends\tpaid | - | - | - | (107,923) | - | (107,923) |
| \t\t\t\tTax\tbenefit\tfrom\texercise\tof\temployee\n\t\t\t\t\t\t\t\t\t\tstock\toptions | - | - | 9,660 | - | - | 9,660 |
| \t\t\t\tIssuance\tof\tcommon\tstock\tfrom |  |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\t\texercise\tof\tstock\toptions | 994 | 6 | 12,499 | - | - | 12,505 |
| \t\t\t\tStock\tappreciation\trights | - | - | 11,913 | - | - | 11,913 |
| \t\t\t\tPurchase\tand\tretirement\tof |  |  |  |  |  |  |
| \t\t\t\t\t\t\t\t\t\tcommon\tstock | (1,155) | (6) | (50,444) | - | - | (50,450) |
| \t\t\t\tIssuance\tof\tcommon\tstock\tthrough\n\t\t\t\t\t\t\t\t\t\tstock\tpurchase\tplan | 125 | 1 | 3,568 | - | - | 3,569 |
| Balance\tat\tDecember\t30,\t2006 | 216,098 | $1,082 | $83,438 | $1,478,654 | ($5,275) | $1,557,899 |

# Consolidated	Statements	of	Cash	Flows

# (In	Thousands)

|  | December	30,<br>2006 | December	31,<br>2005 | December	25,<br>2004 |
| :--- | :--- | :--- | :--- |
| Operating\tActivities: |  |  |  |
| Net\tincome | $514,123 | $311,219 | $205,700 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided |  |  |  |
| \t\t\t\tby\toperating\tactivities: |  |  |  |
| Depreciation | 21,535 | 18,693 | 13,069 |
| Amortization | 22,940 | 24,903 | 21,530 |
| Gain\ton\tsale\tof\tproperty\tand\tequipment | 67 | 37 | 191 |
| Provision\tfor\tdoubtful\taccounts | 955 | 445 | 187 |
| Provision\tfor\tobsolete\tand\tslow-moving\tinventories | 23,245 | 14,755 | 7,158 |
| Foreign\tcurrency\ttransaction\tgains/losses | (344) | (13,957) | 19,736 |
| Deferred\tincome\ttaxes | (35,060) | 8,833 | (7,951) |
| Stock\tappreciation\trights | 11,913 | 925 | - |
| Realized\tgains\ton\tmarketable\tsecurities | (3,852) | - | - |
| Changes\tin\toperating\tassets\tand\tliabilities,\tnet\tof\tacquisition: |  |  |  |
| Accounts\treceivable | (230,111) | (61,607) | (27,086) |
| Inventories | (92,708) | (61,262) | (61,534) |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | (4,357) | (16,021) | (3,190) |
| Purchase\tof\tlicenses | (2,950) | (4,192) | (32,796) |
| Accounts\tpayable | 10,187 | 24,127 | 10,638 |
| Accrued\texpenses | 97,167 | 4,283 | 26,424 |
| Income\ttaxes\tpayable | 29,105 | (4,176) | 36,860 |
| Net\tcash\tprovided\tby\toperating\tactivities | 361,855 | 247,005 | 208,936 |
| Investing\tactivities: |  |  |  |
| Purchases\tof\tproperty\tand\tequipment | (92,906) | (27,130) | (78,145) |
| Proceeds\tfrom\tsale\tof\tproperty\tand\tequipment | 76 | - | 25 |
| Purchase\tof\tintangible\tassets | (3,115) | (3,560) | (1,791) |
| Purchase\tof\tmarketable\tsecurities | (453,085) | (342,359) | (293,780) |
| Sales\tof\tmarketable\tsecurities | 359,313 | 283,253 | 189,221 |
| Purchase\tof\tDynastream\tInnovations,\tInc. | (36,499) | - | - |
| Purchase\tof\tMotionBased\tTechnologies | - | (1,483) | - |
| Change\tin\trestricted\tcash | (169) | 98 | 153 |
| Net\tcash\tused\tin\tinvesting\tactivities | (226,385) | (91,181) | (184,317) |
| Financing\tactivities: |  |  |  |
| Dividends | (107,923) | (53,974) | (54,095) |
| Payment\ton\tlong-term\tdebt | (11) | - | - |
| Proceeds\tfrom\tissuance\tof\tcommon\tstock\tthrough\n\t\t\t\tstock\tpurchase\tplan | 3,569 | 2,824 | 2,691 |
| Proceeds\tfrom\tissuance\tof\tcommon\tstock\tfrom |  |  |  |
| \t\t\t\texercise\tof\tstock\toptions | 12,505 | 6,866 | 3,440 |
| Tax\tbenefit\trelated\tto\tstock\toption\texercise | 9,660 | - | - |
| Purchase\tof\tcommon\tstock | (50,450) | (26,653) | (3,182) |
| Net\tcash\tused\tin\tfinancing\tactivities | ($132,650) | (70,937) | (51,146) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | 149 | (444) | 2,107 |
| Net\tincrease/(decrease)\tin\tcash\tand\tcash\tequivalents | 2,969 | 84,443 | (24,420) |
| Cash\tand\tcash\tequivalents\tat\tbeginning\tof\tyear | 334,352 | 249,909 | 274,329 |
| Cash\tand\tcash\tequivalents\tat\tend\tof\tyear | $337,321 | $334,352 | $249,909 |

# Consolidated	Statements	of	Cash	Flows	(continued)

|  | December	30,<br>2006 | December	31,<br>2005 | December	25,<br>2004 |
| :--- | :--- | :--- | :--- |
| Supplemental\tdisclosures\tof\tcash\tflow\tinformation |  |  |  |
| Cash\tpaid\tduring\tthe\tyear\tfor\tincome\ttaxes | $67,044 | $59,765 | $27,467 |
| Cash\treceived\tduring\tthe\tyear\tfrom\tincome\ttax\trefunds | $537 | $115 | $1,015 |
| Cash\tpaid\tduring\tthe\tyear\tfor\tinterest | $41 | $48 | $38 |
| Supplemental\tdisclosure\tof\tnon-cash\tinvesting\tand\nfinancing\tactivities |  |  |  |
| Change\tin\tmarketable\tsecurities\trelated\tto\tunrealized\nappreciation\t(depreciation) | $68 | ($2,893) | ($4,667) |
| Fair\tvalue\tof\tassets\tacquired | 42,616 | $1,490 | - |
| Liabilities\tassumed | (5,997) | (4) | - |
| Less:\tcash\tacquired | (120) | (3) | - |
| Net\tcash\tpaid | $36,499 | $1,483 | - |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# 1.	History	of	the	Business

Garmin	Ltd.	and	subsidiaries	(together,	the	"Company")	manufacture,	market,	and	distribute	Global	Positioning	System-enabled	products	and	other	related products.	Garmin	Corporation	(GC),	wholly-owned	by	Garmin	Ltd.,	is	primarily	responsible	for	the	manufacturing	and	distribution	of	the	Company's	products	to Garmin	International,	Inc.	(GII),	a	wholly-owned	subsidiary	of	GC,	and	Garmin	(Europe)	Limited	(GEL),	a	wholly-owned	subsidiary	of	Garmin	Ltd.,	and,	to	a	lesser extent,	new	product	development	and	sales	and	marketing	of	the	Company's	products	in	Asia	and	the	Far	East.	GII	is	primarily	responsible	for	sales	and	marketing	of	the Company's	products	in	many	international	markets	and	in	the	United	States	as	well	as	research	and	new	product	development.	GII	also	manufactures	certain	products	for the	Company's	aviation	segment.	GEL	is	primarily	responsible	for	sales	and	marketing	of	the	Company's	products,	principally	within	the	European	market.

# 2.	Stock	Split

On	July		21,	2006	a	two-for-one	stock	split	was	approved	by		Garmin's	shareholders	and	was	effected	at	the	close	of	the	market	on	August	15,	2006.	All	prior period	common	stock	and	applicable	share	and	per	share	amounts	have	been	retroactively	adjusted	to	reflect	the	2006	stock	split.

# 3.	Summary	of	Significant	Accounting	Policies

# Basis	of	Presentation	and	Principles	of	Consolidation

The	accompanying	consolidated	financial	statements	have	been	prepared	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States.	The accompanying	consolidated	financial	statements	reflect	the	accounts	of	Garmin	Ltd.	and	its	wholly	owned	subsidiaries.	All	significant	inter-company	balances	and transactions	have	been	eliminated.

# Fiscal	Year

The	Company	has	adopted	a	52-53-week	period	ending	on	the	last	Saturday	of	the	calendar	year.	Due	to	the	fact	that	there	are	not	exactly	52	weeks	in	a calendar	year	and	there	is	slightly	more	than	one	additional	day	per	year	(not	including	the	effects	of	leap	year)	in	each	calendar	year	as	compared	to	a	52-week	fiscal year,	the	Company	will	have	a	fiscal	year	comprising	53	weeks	in	certain	fiscal	years,	as	determined	by	when	the	last	Saturday	of	the	calendar	year	occurs.

In	those	resulting	fiscal	years	that	have	53	weeks,	the	Company	will	record	an	extra	week	of	sales,	costs,	and	related	financial	activity.	Therefore,	the	financial results	of	those	fiscal	years,	and	the	associated	14-week	fourth	quarter,	will	not	be	entirely	comparable	to	the	prior	and	subsequent	52-week	fiscal	years	and	the associated	quarters	having	only	13	weeks.	Fiscal	2006	and	2004	included	52	weeks	while	fiscal	2005	included	53	weeks.

# Foreign	Currency	Translation

GC	utilizes	the	New	Taiwan	Dollar	as	its	functional	currency.	In	accordance	with	Statement	of	Financial	Accounting	Standards	(SFAS)	No.	52,	Foreign Currency	Translation,	the	financial	statements	of	GC	for	all	periods	presented	have	been	translated	into	United	States	dollars,	the	functional	currency	of	Garmin	Ltd.	and GII,	and	the	reporting	currency	herein,	for	purposes	of	consolidation	at	rates	prevailing	during	the	year	for	sales,	costs,	and	expenses	and	at	end-of-year	rates	for	all assets	and	liabilities.	The	effect	of	this	translation	is	recorded	in	a	separate	component	of	stockholders'	equity.	Cumulative	translation	adjustments	of	($1,168)	as	of December	30,	2006	and	($8,693)	as	of	December	31,	2005,	respectively,	net	of	related	taxes,	have	been	included	in	accumulated	other	comprehensive	gain/(loss)	in	the accompanying	consolidated	balance	sheets.

Transactions	in	 foreign	 currencies	 are	 recorded	 at	 the	 approximate	 rate	 of	 exchange	 at	the	transaction	 date.	Assets	 and	 liabilities	 resulting	 from	 these transactions	are	translated	at	the	rate	of	exchange	in	effect	at	the	balance	sheet	date.	All	differences	are	recorded	in	results	of	operations	and	amounted	to	exchange	gains of	$596	and	$15,265,	and	an	exchange	loss	of	$24,819,	for	the	years	ended	December	30,	2006,	December	31,	2005,	and	December	25,	2004,	respectively.	The	gain	in fiscal	2006	was	the	result	of	nearly	off-setting	currency	moves	in	the	Taiwan	Dollar	and	the	Euro	and	British	Pound	Sterling.	The	gain	in	fiscal	2005	was	the	result	of strengthening	of	the	United	States	dollar	throughout	those	years.	The	loss	in	fiscal	2004	was	due	to	weakening	of	the	United	States	dollar	compared	to	the	Taiwan	Dollar throughout	the	year.	These	gains	and	losses	are	included	in	other	income	in	the	accompanying	consolidated	statements	of	income.

# Earnings	Per	Share

Basic	earnings	per	share	amounts	are	computed	based	on	the	weighted-average	number	of	common	shares	outstanding.	For	purposes	of	diluted	earnings	per share,	the	number	of	shares	that	would	be	issued	from	the	exercise	of	dilutive	stock	options	has	been	reduced	by	the	number	of	shares	which	could	have	been	purchased from	the	proceeds	of	the	exercise	at	the	average	market	price	of	the	Company's	stock	during	the	period	the	options	were	outstanding.	See	Note	11.

# Cash	and	Cash	Equivalents

For	purposes	of	reporting	cash	flows,	cash	and	cash	equivalents	include	cash	on	hand,	operating	accounts,	money	market	funds,	and	securities	with	maturities	of three	months	or	less	when	purchased.	The	carrying	amount	of	cash	and	cash	equivalents	approximates	fair	value,	given	the	short	maturity	of	those	instruments.

# Inventories

Inventories	are	stated	at	the	lower	of	cost	or	market.	Cost	is	determined	using	the	weighted-average	method	(which	approximates	the	first-in,	first-out	(FIFO) method)	by	GC	and	the	FIFO	method	by	GII,	GAT	and	GEL.	Inventories	consisted	of	the	following:

|  | December	30,<br>2006 | December	31,<br>2005 | December	25,<br>2004 |
| :--- | :--- | :--- | :--- |
| Raw\tmaterials | $85,040 | $65,348 | $69,036 |
| Work-in-process | 42,450 | 27,845 | 29,959 |
| Finished\tgoods | 160,748 | 121,404 | 67,274 |
| Inventory\treserves | (17,230) | (14,756) | (11,289) |
|  | $271,008 | $199,841 | $154,980 |

# Property	and	Equipment

Property	and	equipment	are	recorded	at	cost	and	depreciated	using	the	straight-line	method	over	the	following	estimated	useful	lives:

# Long-Lived	Assets

In	accordance	with	SFAS	No.	144,	Accounting	for	the	Impairment	or	Disposal	of	Long-Lived	Assets,	the	Company	reviews	long-lived	assets	for	impairment whenever	events	or	changes	in	circumstances	indicate	the	carrying	amount	of	an	asset	may	not	be	fully	recoverable.	The	carrying	amount	of	a	long-lived	asset	is	not recoverable	if	it	exceeds	the	sum	of	the	undiscounted	cash	flows	expected	to	result	from	the	use	and	eventual	disposition	of	the	asset.	That	assessment	is	based	on	the carrying	amount	of	the	asset	at	the	date	it	is	tested	for	recoverability.	An	impairment	loss	is	measured	as	the	amount	by	which	the	carrying	amount	of	a	long-lived	asset exceeds	its	fair	value.

# Dividends

On	April	26,	2006	the	Board	of	Directors	declared	a	post-split	dividend	of	$0.50	per	share	to	be	paid	on	December	15,	2006	to	shareholders	of	record	on December	1,	2006.	The	Company	paid	out	a	dividend	in	the	amount	of	$107,923.	The	dividend	has	been	reported	as	a	reduction	of	retained	earnings.

On	July	20,	2005	the	Board	of	Directors	declared	a	dividend	of	$0.25	per	share	(post	split)	to	be	paid	on	December	15,	2005	to	shareholders	of	record	on December	1,	2005.	The	Company	paid	out	a	dividend	in	the	amount	of	$53,974.	The	dividend	has	been	reported	as	a	reduction	of	retained	earnings.

On	July	23,	2004	the	Board	of	Directors	declared	a	dividend	of	$0.25	per	share	(post	split)	to	be	paid	on	December	15,	2004	to	shareholders	of	record	on December	1,	2004.	The	Company	paid	out	a	dividend	in	the	amount	of	$54,095.	The	dividend	has	been	reported	as	a	reduction	of	retained	earnings.

Approximately	$129,651	and	$106,979	of	GARMIN's	retained	earnings	are	indefinitely	restricted	from	distribution	to	stockholders	pursuant	to	the	law	of Taiwan	at	December	30,	2006,	and	December	31,	2005,	respectively.

# Intangible	Assets

At	December	30,	2006	and	December	31,	2005,	the	Company	had	patents,	license	agreements,	customer	related	intangibles	and	other	identifiable	finite-lived intangible	assets	recorded	at	a	cost	of	$76,148	and	$93,472,	respectively.	The	Company's	excess	purchase	cost	over	fair	value	of	net	assets	acquired	(goodwill)	was $24,457	at	December	30,	2006	and	$13,701	at	December	31,	2005.

# Marketable	Securities

Management	determines	the	appropriate	classification	of	marketable	securities	at	the	time	of	purchase	and	reevaluates	such	designation	as	of	each	balance	sheet date.

All	of	the	Company's	marketable	securities	are	considered	available-for-sale	at	December	30,	2006.	See	Note	4.	Available-for-sale	securities	are	stated	at	fair value,	with	the	unrealized	gains	and	losses,	net	of	tax,	reported	in	other	comprehensive	gain.	At	December	30,	2006	and	December	31,	2005,	cumulative	unrealized losses	of	$3,968	and	$3,681,	respectively,	were	reported	accumulated	in	other	comprehensive	gain/(loss),	net	of	related	taxes.

The	amortized	cost	of	debt	securities	classified	as	available-for-sale	is	adjusted	for	amortization	of	premiums	and	accretion	of	discounts	to	maturity,	or	in	the case	of	mortgage-backed	securities,	over	the	estimated	life	of	the	security.	Such	amortization	is	included	in	interest	income	from	investments.	Realized	gains	and	losses, and	declines	in	value	judged	to	be	other-than-temporary	are	included	in	net	securities	gains	(losses).	The	cost	of	securities	sold	is	based	on	the	specific	identification method.	Realized	gains	and	losses	on	available-for-sale	securities	have	not	been	material	in	any	period.

The	Company	accounts	for	income	taxes	using	the	liability	method	in	accordance	with	SFAS	No.	109,	Accounting	for	Income	Taxes.	The	liability	method provides	that	deferred	tax	assets	and	liabilities	are	recorded	based	on	the	difference	between	the	tax	bases	of	assets	and	liabilities	and	their	carrying	amount	for	financial reporting	purposes	as	measured	by	the	enacted	tax	rates	and	laws	that	will	be	in	effect	when	the	differences	are	expected	to	reverse.	Income	taxes	have	not	been	accrued by	 Garmin	 Corporation	(GC)	 for	 the	 unremitted	 earnings	 of	 GI	 totaling	 approximately	 $272,732	 and	$210,216	 at	 December	 30,	 2006	 and	 December	 31,	 2005, respectively,	because	such	earnings	are	intended	to	be	reinvested	in	this	subsidiary	indefinitely.		Similarly,	income	taxes	have	not	been	accrued	by	Garmin	B.V.	for	the unremitted	earnings	of	GC	totaling	approximately	$656,530	and	$753,474	at	December	30,	2006	and	December	31,	2005	nor	have	they	been	accrued	by	Garmin	Ltd	for the	unremitted	earnings	of	Garmin	Europe	totaling	approximately	$50,526	and	$35,987	at	December	30,	2006	and	December	31,2005	for	the	same	reason.

The	Company's	income	tax	liability	balance	includes	tax	contingencies	that	are	recorded	to	address	potential	exposures	involving	tax	positions	we	have	taken that	could	be	challenged	by	taxing	authorities.		These	exposures	result	from	the	varying	applications	of	statutes,	rules,	regulations,	and	interpretations.		The	Company's tax	contingencies	are	established	based	on	judgments	about	potential	actions	by	taxing	jurisdictions	and	relate	to	transfer	pricing	positions	we	have	taken	in	a	variety	of the	countries	in	which	we	operate,	certain	tax	credits,	and	various	foreign	and	state	tax	matters.		The	ultimate	resolution	of	these	matters	may	be	materially	greater	or	less than	the	amount	we	have	accrued	and	could	have	a	material	effect	on	our	effective	tax	rate	in	the	period	when	such	matter	is	resolved.

# Use	of	Estimates

The	preparation	of	consolidated	financial	statements	in	conformity	with	accounting	principles	generally	accepted	in	the	United	States	requires	management	to make	estimates	and	assumptions	that	affect	the	amounts	reported	in	the	consolidated	financial	statements	and	accompanying	notes.	Actual	results	could	differ	from	those estimates.

# Concentration	of	Credit	Risk

The	Company	grants	credit	 to	certain	customers	who	meet	 the	Company's	pre-established	credit	requirements.	Generally,	the	Company	does	not	require security	when	trade	credit	is	granted	to	customers.	Credit	losses	are	provided	for	in	the	Company's	consolidated	financial	statements	and	consistently	have	been	within management's	expectations.	Certain	customers	are	allowed	extended	terms	consistent	with	normal	industry	practice.	Most	of	these	extended	terms	can	be	classified	as either	relating	to	seasonal	sales	variations	or	to	the	timing	of	new	product	releases	by	the	Company.

The	Company	 recognizes	 revenue	 from	 product	 sales	 when	 the	 product	 is	 shipped	to	 the	customer	 and	 title	 has transferred.	The	 Company	 assumes	 no remaining	significant	obligations	associated	with	the	product	sale	other	than	that	related	to	its	warranty	programs	discussed	below.

# Shipping	and	Handling	Costs

Shipping	and	handling	costs	are	included	in	cost	of	goods	sold	in	the	accompanying	consolidated	financial	statements.

# Product	Warranty

The	Company	provides	for	estimated	warranty	costs	at	the	time	of	sale.	The	warranty	period	is	generally	for	one	year	from	date	of	shipment	with	the	exception of	certain	aviation	products	and	marine	products	for	which	the	warranty	period	is	two	years	from	the	date	of	installation.

# Sales	Programs

The	Company	provides	certain	monthly	and	quarterly	incentives	for	its	dealers	based	on	various	factors	including	dealer	purchasing	volume	and	growth. Additionally,	from	time	to	time,	the	Company	provides	rebates	to	end	users	on	certain	products.	Estimated	rebates	and	incentives	payable	to	distributors	are	regularly reviewed	and	recorded	as	accrued	expenses	on	a	monthly	basis.	In	addition,	the	Company	provides	retailers	with	product	discounts	termed	"price	protection"	to	assist these	retailers	in	clearing	older	products	from	their	inventories	in	advance	of	new	product	releases.	These	rebates,	incentives,	and	price	protections	are	recorded	as reductions	to	net	sales	in	the	accompanying	consolidated	statements	of	income.

# Advertising	Costs

A	majority	of	the	Company's	research	and	development	is	performed	in	the	United	States.	Research	and	development	costs,	which	are	expensed	as	incurred, amounted	to	approximately	$113,314,	$74,879,	and	$61,580	for	the	years	ended	December	30,	2006,	December	31,	2005,	and	December	25,	2004,	respectively.

# Customer	Service	and	Technical	Support

Customer	service	and	technical	support	costs	are	included	on	the	sales	and	marketing	expense	line	on	our	statements	of	operations.	Customer	service	and technical	support	costs	include	costs	associated	with	performing	order	processing,	answering	customer	inquiries	by	telephone	and	through	Web	sites,	e-mail	and	other electronic	means,	and	providing	free	technical	support	assistance	to	customers.	In	connection	with	the	sale	of	certain	products,	we	provide	a	limited	amount	of	free technical	support	assistance	to	customers.	The	technical	support	is	provided	within	one	year	after	the	associated	revenue	is	recognized.	We	accrue	the	estimated	cost	of providing	this	free	support	upon	product	shipment.

# Software	Development	Costs

Statement	of	Financial	Accounting	Standards	(SFAS)	86,	"Accounting	for	Costs	of	Computer	Software	to	be	Sold,	Leased,	or	otherwise	Marketed,"	requires companies	to	expense	software	development	costs	as	they	incur	them	until	technological	feasibility	has	been	established,	at	which	time	those	costs	are	capitalized	until the	product	is	available	for	general	release	to	customers.	Our	capitalized	software	development	costs	are	not	significant.	SFAS	2,	"Accounting	for	Research	and Development	Costs,"	establishes	accounting	and	reporting	standards	for	research	and	development.	In	accordance	with	SFAS	2,	costs	we	incur	to	enhance	our	existing products	or	after	the	general	release	of	the	service	using	the	product	are	expensed	in	the	period	they	are	incurred	and	included	in	research	and	development	costs	on	our statement	of	operations.

# Accounting	for	Stock-Based	Compensation

The	Company	currently	sponsors	three	stock	based	employee	compensation	plans.	On	January	1,	2006,	the	Company	adopted	Statement	of	Financial Accounting	Standards	("SFAS")	No.	123(R),	Share-Based	Payment,	which	is	a	revision	of	SFAS	No.	123,	Accounting	for	Stock-Based	Compensation.	SFAS	No.	123(R) requires	the	measurement	and	recognition	of	compensation	expenses	for	all	share-based	payment	awards	made	to	employees	and	directors	including	employee	stock options	and	restricted	stock	based	on	estimated	fair	values.	SFAS	No.	123(R)	supersedes	the	Company's	previous	accounting	under	Accounting	Principles	Board ("APB")	Opinion	No.	25,	Accounting	for	Stock	Issued	to	Employees,	for	periods	beginning	in	fiscal	2006.

The	Company	adopted	SFAS	No.	123(R)	using	the	modified	prospective	method.	Under	the	modified	prospective	method,	compensation	costs	are recognized	beginning	with	the	effective	date	based	on	the	requirements	of	SFAS	No.	123(R)	for	all	share-based	payments	granted	after	the	effective	date	and	based	on the	requirements	of	SFAS	No.	123	for	all	awards	granted	to	employees	prior	to	the	effective	date	of	SFAS	No.	123(R)	that	remain	unvested	on	the	effective	date.	The Company's	consolidated	financial	statements	as	of	and	for	fiscal	year	ended	December	30,	2006	reflect	the	impact	of	SFAS	No.	123(R).	In	accordance	with	the	modified prospective	transition	method,	the	Company's	consolidated	financial	statements	for	the	prior	periods	have	not	been	restated	to	reflect,	and	do	not	include,	the	impact	of SFAS	No.	123(R).

SFAS	No.	123(R)	requires	companies	to	estimate	the	fair	value	of	share-based	payment	awards	on	the	date	of	grant	using	an	option-pricing	model.	The value	of	the	portion	of	the	award	that	is	ultimately	expected	to	vest	is	recognized	as	stock-based	compensation	expenses	over	the	requisite	service	period	in	the Company's	consolidated	financial	statements.	Prior	to	the	adoption	of	SFAS	No.	123(R),	the	Company	accounted	for	stock-based	awards	to	employees	and	directors using	the	intrinsic	value	method	in	accordance	with	APB	Opinion	No.	25	as	allowed	under	SFAS	No.	123.	Under	the	intrinsic	value	method,	no	stock-based compensation	expenses	have	been	recognized	in	the	Company's	consolidated	statements	of	income	for	stock	options	because	the	exercise	price	of	the	Company's	stock options	granted	to	employees	and	directors	equaled	the	fair	market	value	of	the	underlying	stock	at	the	date	of	grant.

As	stock-based	compensation	expenses	recognized	in	the	accompanying	consolidated	statement	of	income	for	the	fiscal	year	ended	December	30,	2006	is based	on	awards	ultimately	expected	to	vest,	it	has	been	reduced	for	estimated	forfeitures.	SFAS	No.	123(R)	requires	forfeitures	to	be	estimated	at	the	time	of	grant	and revised,	if	necessary,	in	subsequent	periods	if	actual	forfeitures	differ	from	those	estimates.	Forfeitures	were	estimated	based	on	historical	experience	and	management's estimates.	In	the	Company's	pro	forma	information	required	under	SFAS	No.	123	for	the	periods	prior	to	fiscal	2006,	the	Company	accounted	for	stock	option forfeitures	as	they	occurred.	The	cumulative	adjustment	to	reduce	costs	that	were	actually	recognized	to	reflect	estimated	forfeitures	is	not	material.

The	following	table	illustrates	the	effect	on	net	income	and	earnings	per	share	if	the	Company	had	applied	the	fair	value	recognition	provisions	of	SFAS	No.	123, Accounting	for	Stock-Based	Compensation,	to	stock-based	employee	compensation.

|  | 2005 | 2004 |
| :--- | :--- | :--- |
| Net\tincome\tas\treported | $311,219 | $205,700 |
| Add:\tTotal\tstock-based\temployee\tcompensation\n\t\t\t\texpense\trecorded\tduring\tthe\tyear | 925 | - |
| Deduct:\tTotal\tstock-based\temployee\tcompensation\texpense |  |  |
| \t\t\t\tdetermined\tunder\tfair-value\tbased\tmethod\tfor\tall\tawards,\n\t\t\t\tnet\tof\ttax\teffects | (7,239) | (5,460) |
| Pro\tforma\tnet\tincome | $304,905 | $200,240 |
| Net\tincome\tper\tshare\tas\treported: |  |  |
| \t\t\t\t\t\tBasic | $1.44 | $0.95 |
| \t\t\t\t\t\tDiluted | $1.43 | $0.94 |
| Pro\tforma\tnet\tincome\tper\tshare: |  |  |
| \t\t\t\t\t\tBasic | $1.41 | $0.93 |
| \t\t\t\t\t\tDiluted | $1.40 | $0.92 |

# Recently	Issued	Accounting	Pronouncements

In	June	2006,	The	Financial	Accounting	Standards	Board	(FASB)	issued	FASB	Interpretation	No.	48,	"Accounting	for	Uncertainty	in	Income	Taxes	-	an interpretation	of	FASB	Statement	No.	109"	(FIN	48),	which	prescribes	a	recognition	threshold	and	measurement	attribute	for	the	financial	statement	recognition	and measurement	of	a	tax	position	taken	or	expected	to	be	taken	in	a	tax	return.	FIN	48	also	provides	guidance	on	derecognition,	classification,	interest	and	penalties, accounting	in	interim	periods,	disclosure	and	transition.	FIN	48	will	be	effective	for	our	fiscal	year	beginning	December	31,	2006.	We	are	currently	evaluating	the impact	of	the	adoption	of	FIN	48,	however	we	do	not	expect	the	adoption	to	have	a	material	impact	on	our	financial	reporting	and	disclosure.

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.	SFAS	No.	157	will	be	effective	for	our	fiscal	year	beginning	December	31,	2006.	We	do	not	expect	the adoption	of	SFAS	No.	158	to	have	a	material	impact	on	our	financial	reporting	and	disclosure.

SFAS	No.	153,	"Exchanges	of	Nonmonetary	Assets,	an	amendment	of	APB	Opinion	No.	29,	Accounting	for	Nonmonetary	Transactions"	eliminates	the	narrow exception	for	nonmonetary	exchanges	of	similar	productive	assets	and	replaces	it	with	a	broader	exception	for	exchanges	of	nonmonetary	assets	that	do	not	have commercial	substance.	Further,	the	amendments	made	by	SFAS	No.	153	are	based	on	the	principle	that	exchanges	of	nonmonetary	assets	should	be	measured	based	on the	fair	value	of	the	assets	exchanged.	Previously,	Opinion	No.	29	required	that	the	accounting	for	an	exchange	of	a	productive	asset	for	a	similar	productive	asset	or	an equivalent	interest	in	the	same	or	similar	productive	asset	should	be	based	on	the	recorded	amount	of	the	asset	relinquished.	The	statement	is	effective	for	nonmonetary asset	exchanges	occurring	in	fiscal	periods	beginning	after	June	15,	2005.	Earlier	application	is	permitted	for	nonmonetary	asset	exchanges	in	fiscal	periods	beginning after	the	date	of	issuance.	The	provisions	of	this	statement	shall	be	applied	prospectively.	The	adoption	of	SFAS	No.	153	did	not	have	a	material	effect	on	the Company's	consolidated	financial	statements.

SFAS	No.	154,	"Accounting	Changes	and	Error	Corrections"	is	a	replacement	of	APB	Opinion	No.	20,	Accounting	Changes,	and	FASB	Statement	No.	3, Reporting	Accounting	Changes	in	Interim	Financial	Statements.	Statement	154	applies	to	all	voluntary	changes	in	accounting	principle	and	changes	the	accounting	for and	a	reporting	of	a	change	in	accounting	principle.	Statement	154	requires	retrospective	application	to	the	prior	periods'	financial	statements	of	a	voluntary	change	in accounting	principle	unless	it	is	impracticable.	Statement	154	is	effective	for	the	accounting	changes	and	corrections	of	errors	made	in	fiscal	years	beginning	after December	15,	2005.	The	adoption	of	SFAS	No.	154	did	not	have	a	material	effect	on	the	Company's	consolidated	financial	statements.

The	following	is	a	summary	of	the	Company's	marketable	securities	classified	as	available-for-sale	securities	at	December	30,	2006:

|  |  |  | Estimated	Fair |
| :--- | :--- | :--- | :--- |
|  |  | Gross\tUnrealized | Value\t(Net |
|  | Amortized\tCost | Gains/Losses | Carrying\tAmount) |
| Mortgage-backed\tsecurities | $359,809 | ($4,071) | $355,738 |
| Obligations\tof\tstates\tand\tpolitical\tsubdivisions | 48,354 | (193) | 48,161 |
| U.S.\tcorporate\tbonds | 57,926 | (429) | 57,497 |
| Other | 19,521 | (41) | 19,480 |
| Total | $485,610 | ($4,734) | $480,876 |

The	following	is	a	summary	of	the	Company's	marketable	securities	classified	as	available-for-sale	securities	at	December	31,	2005:

|  |  |  | Estimated	Fair |
| :--- | :--- | :--- | :--- |
|  |  | Gross\tUnrealized | Value\t(Net |
|  | Amortized\tCost | Gains/Losses | Carrying\tAmount) |
| Mortgage-backed\tsecurities | $278,932 | ($4,611) | $274,321 |
| Obligations\tof\tstates\tand\tpolitical\tsubdivisions | 33,425 | (456) | 32,969 |
| U.S.\tcorporate\tbonds | 45,718 | (731) | 44,987 |
| Other | 23,450 | 996 | 24,446 |
| Total | $381,525 | ($4,802) | $376,723 |

The	amortized	cost	and	estimated	fair	value	of	marketable	securities	at	December	30,	2006,	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.

|  | Cost | Fair	Value |
| :--- | :--- | :--- |
| Due\tin\tone\tyear\tor\tless\t(2006) | $73,398 | $73,033 |
| Due\tafter\tone\tyear\tthrough\tfive\tyears\t(2007-2011) | 277,510 | 274,143 |
| Due\tafter\tfive\tyears\tthrough\tten\tyears\t(2012-2016) | 106,917 | 106,124 |
| Due\tafter\tten\tyears\t(2017\tand\tthereafter) | 27,785 | 27,576 |
|  | $485,610 | $480,876 |

The	Company	invests	in	auction	rate	securities	which	effectively	mature	every	28	days.	Upon	maturity,	the	proceeds	are	reinvested	in	the	same	security.	The effective	maturity	date	differs	from	the	stated	maturity	dates.	The	securities	are	classified	in	the	balance	sheet	at	their	stated	maturity	dates.

# 5.	Commitments	and	Contingencies

Rental	expense	related	to	office,	equipment,	warehouse	space	and	real	estate	amounted	to	$3,119,	$690,	and	$608	for	the	years	ended	December	30,	2006,

Future	minimum	lease	payments	are	as	follows:

Certain	cash	balances	of	GEL	are	held	as	collateral	by	a	bank	securing	payment	of	the	United	Kingdom	value-added	tax	requirements.	These	amounted	to $1,525	and	$1,356	at	December	30,	2006	and	December	31,	2005,	respectively,	and	are	reported	as	restricted	cash.

In	the	normal	course	of	business,	the	Company	and	its	subsidiaries	are	parties	to	various	legal	claims,	actions,	and	complaints,	including	matters	involving patent	infringement	and	other	intellectual	property	claims	and	various	other	risks.	It	is	not	possible	to	predict	with	certainty	whether	or	not	the	Company	and	 its subsidiaries	will	ultimately	be	successful	in	any	of	these	legal	matters,	or	if	not,	what	the	impact	might	be.	However,	the	Company's

management	does	not	expect	that	the	results	in	any	of	these	legal	proceedings	will	have	a	material	adverse	effect	on	the	Company's	results	of	operations,	financial position	or	cash	flows.

# 6.	Employee	Benefit	Plans

GII	sponsors	an	employee	retirement	plan	under	which	its	employees	may	contribute	up	to	50%	of	their	annual	compensation	subject	to	Internal	Revenue	Code maximum	limitations	 and	 to	 which	 GII	 contributes	 a	 specified	 percentage	 of	 each	participant's	annual	compensation	up	 to	certain	 limits	as	defined	 in	 the	Plan. Additionally,	GEL	has	a	defined	contribution	plan	under	which	its	employees	may	contribute	up	to	7.5%	of	their	annual	compensation.	Both	GII	and	GEL	contribute	an amount	determined	annually	at	the	discretion	of	the	Board	of	Directors.	During	the	years	ended	December	30,	2006,	December	31,	2005,	and	December	25,	2004, expense	related	to	these	plans	of	$8,690,	$6,378,	and	$5,183,	was	charged	to	operations.

Certain	of	the	Company's	foreign	subsidiaries	participate	in	local	defined	benefit	pension	plans.	Contributions	are	calculated	by	formulas	that	consider	final pensionable	salaries.	Neither	obligations	nor	contributions	for	the	years	ended	December	30,	2006,	December	31,	2005,	and	December	25,	2004,	were	significant.

The	Company's	income	tax	provision	(benefit)	consists	of	the	following:

|  | December	30,<br>2006 | December	31,<br>2005 | December	25,<br>2004 |
| :--- | :--- | :--- | :--- |
| Federal: |  |  |  |
| \t\t\t\t\t\tCurrent | $42,850 | $7,738 | $10,323 |
| \t\t\t\t\t\tDeferred | (21,153) | 11,741 | 1,362 |
|  | 21,697 | 19,479 | 11,685 |
| State: |  |  |  |
| \t\t\t\t\t\tCurrent | 4,935 | (656) | 3,253 |
| \t\t\t\t\t\tDeferred | (3,922) | 3,219 | (5,258) |
|  | 1,013 | 2,563 | (2,005) |
| Foreign: |  |  |  |
| \t\t\t\t\t\tCurrent | 65,441 | 45,466 | 43,886 |
| \t\t\t\t\t\tDeferred | (7,720) | (6,127) | (4,055) |
|  | 57,721 | 39,339 | 39,831 |
| Total | $80,431 | $61,381 | $49,511 |

The	income	tax	provision	differs	from	the	amount	computed	by	applying	the	statutory	federal	income	tax	rate	to	income	before	taxes.	The	sources	and	tax effects	of	the	differences,	including	the	impact	of	establishing	tax	contingency	accruals,	are	as	follows:

|  | December	30,<br>2006 | Fiscal	Year	Ended<br>December	31,<br>2005 | December	25,<br>2004 |
| :--- | :--- | :--- | :--- |
| Federal\tincome\ttax\texpense\tat\n\t\t\t\tU.S.\tstatutory\trate | $208,094 | $130,410 | $89,324 |
| State\tincome\ttax\texpense,\tnet\tof\n\t\t\t\tfederal\ttax\teffect | 658 | 1,666 | (1,303) |
| Foreign\ttax\trate\tdifferential | (112,903) | (53,712) | (32,516) |
| Taiwan\ttax\tholiday\tbenefit | (50,905) | (48,175) | (27,753) |
| Other\tforeign\ttaxes\tless |  |  |  |
| \t\t\t\t\t\tincentives\tand\tcredits | 43,445 | 30,427 | 26,080 |
| Other,\tnet | (7,958) | 765 | (4,321) |
| Income\ttax\texpense | $80,431 | $61,381 | $49,511 |

The	Company's	income	before	income	taxes	attributable	to	non-U.S.	operations	was	$508,367,	$307,712,	and	$211,093,	for	the	years	ended	December	30, 2006,	December	31,	2005,	and	December	25,	2004,	respectively.	The	Taiwan	tax	holiday	 benefits	included	in	the	table	above	reflect	$0.24,	$0.22,	and	$0.13	per weighted-average	common	share	outstanding	for	 the	years	ended	December	30,	2006,	December	31,	2005,	and	December	25,	2004,	respectively.	The	Company currently	expects	to	benefit	from	these	Taiwan	tax	holidays	through	2011,	at	which	time	these	tax	benefits	expire.

Deferred	income	taxes	reflect	the	net	tax	effects	of	temporary	differences	between	the	carrying	amounts	of	assets	and	liabilities	for	financial	reporting	purposes and	the	amounts	used	for	income	tax	purposes.	Significant	components	of	the	Company's	deferred	tax	assets	and	liabilities	are	as	follows:

|  | December	30,<br>2006 | December	31,<br>2005 | December	25,<br>2004 |
| :--- | :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |  |
| \t\t\t\tProduct\twarranty\taccruals | $11,259 | $5,017 | $4,084 |
| \t\t\t\tAllowance\tfor\tdoubtful\taccounts | 1,327 | 1,361 | 1,187 |
| \t\t\t\tInventory\tcarrying\tvalue | 4,555 | 4,120 | 2,792 |
| \t\t\t\tSales\tprogram\tallowances | 12,629 | 3,798 | 4,035 |
| \t\t\t\tReserve\tfor\tsales\treturns | 1,660 | 566 | 1,129 |
| \t\t\t\tVacation\taccrual | 2,424 | 1,401 | 1,022 |
| \t\t\t\tUnrealized\tintercompany\tprofit\tin\tinventory | 21,115 | 12,978 | 16,905 |
| \t\t\t\tUnrealized\tinvestment\tloss | - | 219 | 433 |
| \t\t\t\tUnrealized\tforeign\tcurrency\tloss | 325 | 550 | 3,579 |
| \t\t\t\tStock\toption\tcompensation | 3,720 | - | - |
| \t\t\t\tTax\tcredit\tcarryforwards,\tnet | 2,181 | 1,482 | 2,914 |
| \t\t\t\tOther | 4,225 | - | 447 |
|  | 65,420 | 31,492 | 38,527 |
| Deferred\ttax\tliabilities: |  |  |  |
| \t\t\t\tDepreciation | 7,883 | 9,019 | 5,267 |
| \t\t\t\tUnrealized\tinvestment\tgain | 278 | - | - |
| \t\t\t\tOther | 2,454 | 2,344 | - |
|  | 10,615 | 11,363 | 5,267 |
| Net\tdeferred\ttax\tassets | $54,805 | $20,129 | $33,260 |

# 8.	Fair	Value	of	Financial	Instruments

In	accordance	with	SFAS	No.	107,	Disclosures	about	Fair	Value	of	Financial	Instruments,	the	following	summarizes	required	information	about	the	fair	value of	certain	financial	instruments	for	which	it	is	currently	practicable	to	estimate	such	value.	None	of	the	financial	instruments	are	held	or	issued	for	trading	purposes.	The carrying	amounts	and	fair	values	of	the	Company's	financial	instruments	are	as	follows:

|  | December	30,	2006 | December	30,	2006 | December	31,	2005 | December	31,	2005 |
| :--- | :--- | :--- | :--- | :--- |
|  | Carrying\nAmount | Fair\nValue | Carrying\nAmount | Fair\nValue |
| Cash\tand\tcash\tequivalents | $337,321 | $337,321 | $334,352 | $334,352 |
| Restricted\tcash | 1,525 | 1,525 | 1,356 | 1,356 |
| Marketable\tsecurities | 480,876 | 480,876 | 376,723 | 376,723 |

# 9.	Segment	Information

In	the	first	quarter	of	2006,	the	Company	changed	its	internal	reporting.	Upon	this	change,	it	determined	that	it	has	four	reportable	segments.	Prior	periods	have been	restated	to	conform	to	the	current	period's	presentation.

The	Company	operates	within	its	targeted	markets	through	four	reportable	segments,	those	being	related	to	products	sold	into	the	marine,	automotive/mobile, outdoor/fitness,	and	aviation	markets.	All	of	the	Company's	reportable	segments	offer	products	through	the	Company's	network	of	independent	dealers	and	distributors as	well	as	through	OEM's.	However,	the	nature	of	products	and	types	of	customers	for	the	four	segments	vary	significantly.	As	such,	the	segments	are	managed separately.	The	Company's	marine,	automotive/mobile,	and	outdoor/fitness	segments	include	portable	global	positioning	system	(GPS)	receivers	and	accessories	sold primarily	to	retail	outlets.	These	products	are	produced	primarily	by	the	Company's	subsidiary	in	Taiwan.	The	Company's	aviation	products	are	portable	and	panel mount	avionics	for	Visual	Flight	Rules	and	Instrument	Flight	Rules	navigation	and	are	sold	primarily	to	aviation	dealers	and	certain	aircraft	manufacturers.

The	Company's	Chief	Executive	Officer	has	been	identified	as	the	Chief	Operating	Decision	Maker	(CODM).	The	CODM	evaluates	performance	and	allocates resources	based	on	income	before	income	taxes	of	each	segment.	Income	before	income	taxes	represents	net	sales	less	operating	expenses	including	certain	allocated general	and	administrative	costs,	interest	income	and	expense,	foreign	currency	adjustments,	and	other	non-operating	corporate	expenses.	The	accounting	policies	of	the reportable	segments	are	the	same	as	those	described	in	the	summary	of	significant	accounting	policies.	There	are	no	inter-segment	sales	or	transfers.

The	identifiable	assets	associated	with	each	reportable	segment	reviewed	by	the	CODM	include	accounts	receivable	and	inventories.	The	Company	does	not report	property	and	equipment,	intangible	assets,	depreciation	and	amortization,	or	capital	expenditures	by	segment	to	the	CODM.

Revenues,	interest	 income	and	 interest	expense,	 income	before	 income	 taxes,	and	identifiable	assets	for	each	of the	Company's	reportable	segments	are presented	below:

|  | Aviation | Outdoor/<br>Fitness | Marine | Auto/<br>Mobile | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tsales\tto\texternal\tcustomers | $232,906 | $285,362 | $166,639 | $1,089,093 | $1,774,000 |
| Allocated\tinterest\tincome | 1,952 | 5,693 | 3,020 | 25,232 | 35,897 |
| Allocated\tinterest\texpense | 49 | (44) | 17 | (63) | (41) |
| Income\tbefore\tincome\ttaxes | 86,141 | 120,905 | 65,087 | 322,421 | 594,554 |
| Assets: |  |  |  |  |  |
| \t\t\t\tAccounts\treceivable | 52,978 | 64,910 | 37,905 | 247,731 | 403,524 |
| \t\t\t\tInventories | 35,580 | 43,594 | 25,457 | 166,377 | 271,008 |

|  |  | Fiscal	Year	Ended	December	31,	2005 | Fiscal	Year	Ended	December	31,	2005 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Aviation | Outdoor/\nFitness | Marine | Auto/\nMobile | Total |
| Net\tsales\tto\texternal\tcustomers | $229,158 | $236,936 | $158,262 | $403,417 | $1,027,773 |
| Allocated\tinterest\tincome | 1,257 | 4,901 | 3,152 | 10,276 | 19,586 |
| Allocated\tinterest\texpense | (3) | (12) | (8) | (25) | (48) |
| Income\tbefore\tincome\ttaxes | 99,504 | 90,937 | 56,620 | 125,539 | 372,600 |
| Assets: |  |  |  |  |  |
| \t\t\t\tAccounts\treceivable | 38,127 | 39,421 | 26,331 | 67,118 | 170,997 |
| \t\t\t\tInventories | 44,558 | 46,070 | 30,773 | 78,440 | 199,841 |

# Fiscal	Year	Ended	December	25,	2004

|  |  | Fiscal	Year	Ended	December	25,	2004 | Fiscal	Year	Ended	December	25,	2004 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Aviation | Outdoor/\nFitness | Marine | Auto/\nMobile | Total |
| Net\tsales\tto\texternal\tcustomers | $171,526 | $222,042 | $165,510 | $203,471 | $762,549 |
| Allocated\tinterest\tincome | 1,091 | 3,008 | 2,107 | 3,213 | 9,419 |
| Allocated\tinterest\texpense | (4) | (12) | (9) | (13) | (38) |
| Income\tbefore\tincome\ttaxes | 58,884 | 78,409 | 61,878 | 56,040 | 255,211 |
| Assets: |  |  |  |  |  |
| \t\t\t\tAccounts\treceivable | 24,770 | 32,065 | 23,901 | 29,383 | 110,119 |
| \t\t\t\tInventories | 34,861 | 45,128 | 33,638 | 41,353 | 154,980 |

Net	sales,	long-lived	assets	(property	and	equipment),	and	net	assets	by	geographic	area	are	as	follows	as	of	and	for	the	years	ended	December	30,	December 31,	2005,	and	December	25,	2004:

|  | America | Asia | Europe | Total |
| :--- | :--- | :--- | :--- | :--- |
| December\t30,\t2006 |  |  |  |  |
| Net\tsales\tto\texternal\tcustomers | $1,093,581 | $87,048 | $593,371 | $1,774,000 |
| Long-lived\tassets | 148,922 | 65,280 | 36,786 | 250,988 |
| Net\tassets | 431,795 | 1,074,827 | 51,277 | 1,557,899 |
| December\t31,\t2005 |  |  |  |  |
| Net\tsales\tto\texternal\tcustomers | $661,085 | $50,447 | $316,241 | $1,027,773 |
| Long-lived\tassets | 135,875 | 42,770 | 528 | 179,173 |
| Net\tassets | 377,684 | 742,843 | 36,737 | 1,157,264 |
| December\t25,\t2004 |  |  |  |  |
| Net\tsales\tto\texternal\tcustomers | $532,501 | $34,185 | $195,863 | $762,549 |
| Long-lived\tassets | 133,832 | 37,341 | 457 | 171,630 |
| Net\tassets | 330,350 | 573,363 | 31,874 | 935,587 |

No	single	customer	accounted	for	10%	or	more	of	the	Company's	consolidated	net	sales	in	any	period.

# 10.	Stock	Compensation	Plans

Stock-based	compensation	expenses	recognized	in	the	accompanying	consolidated	statement	of	income	for	the	fiscal	year	ended	December	30,	2006,	was	$12 million.	As	a	result	of	the	adoption	of	SFAS	No.	123(R),	the	Company's	income	before	income	taxes	and	net	income	for	the	fiscal	year	ended	December	30,	2006	are $6,194	and	$5,358	million	lower,	respectively,	than	if	it	had	continued	to	account	for	share-based	compensation	under	APB	Opinion	No.	25.	The	adoption	of	SFAS	No. 123(R)	decreased	the	Company's	calculation	of	basic	and	diluted	earnings	per	share	by	$0.02	during	the	fiscal	year	ended	December	30,	2006.

The	various	Company	stock	compensation	plans	are	summarized	below:

# 2005	Equity	Incentive	Plan

In	June,	2005,	the	shareholders	adopted	an	equity	incentive	plan	(the	Plan)	providing	for	grants	of	incentive	and	nonqualified	stock	options	and	"other"	stock compensation	awards	to	employees	of	the	Company	and	its	subsidiaries,	pursuant	to	which	up	to	10,000,000	common	shares	were	available	for	issuance.	The	stock options	and	stock	appreciation	rights	vest	evenly	over	a	period	of	five	years	or	as	otherwise	determined	by	the	Board	of	Directors	or	the	Compensation	Committee	and generally	expire	ten	years	from	the	date	of	grant,	if	not	exercised.	During	2006	and	2005,	the	Company	granted	2,341,800	and	896,000	stock	appreciation	rights, respectively.

# 2000	Equity	Incentive	Plan

In	October	2000,	the	shareholders	adopted	an	equity	incentive	plan	(the	Plan)	providing	for	grants	of	incentive	and	nonqualified	stock	options	and	"other" stock	compensation	awards	to	employees	of	the	Company	and	its	subsidiaries,	pursuant	to	which	up	to	7,000,000	common	shares	of	common	stock	were	available	for issuance.	 The	 stock	 options	 and	 stock	 appreciation	 rights	 vest	 evenly	over	 a	period	 of	 five	 years	 or	 as	 otherwise	 determined	 by	 the	 Board	 of	 Directors	or	 the Compensation	Committee	and	generally	expire	ten	years	from	the	date	of	grant,	if	not	exercised.	During	2006,	2005,	and	2004,	the	Company	granted	64,131,	755,750, and	1,394,000	nonqualified	stock	options,	respectively.	There	have	been	no	"other"	stock	compensation	awards	granted	under	the	Plan.

# 2000	Non-employee	Directors'	Option	Plan

Also	in	October	2000,	the	stockholders	adopted	a	stock	option	plan	for	non-employee	directors	(the	Directors	Plan)	providing	for	grants	of	options	for	up	to 100,000	common	shares.	The	term	of	each	award	is	ten	years.	All	awards	vest	evenly	over	a	three-year	period.	During	2006,	2005,	and	2004,	options	to	purchase	7,630, 11,000,	and	13,242	shares	were	granted	under	this	plan.

# Stock-Based	Compensation	Activity

A	summary	of	the	Company's	stock-based	compensation	activity	and	related	information	under	the	2005	Equity	Incentive	Plan,	the	2000	Equity	Incentive	Plan and	the	2000	Non-employee	Directors'	Option	Plan	for	the	years	ended	December	30,	2006,	December	31,	2005,	and	December	25,	2004	is	provided	below:

|  | Average | Number	of |
| :--- | :--- | :--- |
|  | Exercise\tPrice | Shares |
|  |  | (In\tThousands) |
| Outstanding\tat\tDecember\t27,\t2003 | $14.21 | 4,514 |
| Granted | 19.87 | 1,406 |
| Exercised | 8.56 | (404) |
| Canceled | 16.08 | (66) |
| Outstanding\tat\tDecember\t25,\t2004 | 16.06 | 5,450 |
| Granted | 26.51 | 1,672 |
| Exercised | 10.68 | (644) |
| Canceled | 18.51 | (124) |
| Outstanding\tat\tDecember\t31,\t2005 | 19.29 | 6,354 |
| Granted | 48.54 | 2,413 |
| Exercised | 12.59 | (994) |
| Canceled | 28.57 | (47) |
| Outstanding\tat\tDecember\t30,\t2006 | $29.24 | 7,726 |
| Exercisable\tat\tDecember\t30,\t2006 | $16.98 | 2,591 |

| $7.00	-$15.00 | 1,566 | 4.98 | 1,390 |
| :--- | :--- | :--- | :--- |
| $15.01\t-\t$25.00 | 1,970 | 7.99 | 553 |
| $25.01\t-\t$35.00 | 1,803 | 7.97 | 648 |
| $35.01\t-\t$45.00 | 20 | 9.43 | - |
| $45.01\t-\t$55.00 | 2,366 | 9.69 | - |
| $55.01\t-\t$65.00 | - | - | - |
|  | 7,726 | 7.90 | 2,591 |

The	weighted-average	remaining	contract	life	for	options	outstanding	and	exercisable	at	December	30,	2006	are	7.90	and	6.14	years	respectively.

Pro	forma	information	regarding	net	income	and	earnings	per	share	is	required	by	SFAS	No.	123.	SFAS	No.	123	requires	the	pro	forma	information	be determined	as	if	the	Company	has	accounted	for	its	employee	stock	options	under	the	fair	value	method	of	that	statement.	As	described	below,	the	fair	value	accounting provided	under	SFAS	No.	123	requires	the	use	of	option	valuation	models	that	were	not	developed	for	use	in	valuing	employee	stock	options.

The	fair	value	for	these	options	was	estimated	at	the	date	of	grant	using	a	Black-Scholes	option	pricing	model	with	the	following	weighted-average	assumptions for	2006,	2005	and	2004:

|  | 2006 | 2005 | 2004 |
| :--- | :--- | :--- | :--- |
| Weighted\taverage\tfair\tvalue\tof\toptions\tgranted | $20.01 | $9.48 | $7.28 |
| Expected\tvolatility | 0.3534 | 0.3224 | 0.3577 |
| Distribution\tyield | 1.00% | 0.98% | 1.30% |
| Expected\tlife\tof\toptions\tin\tyears | 6.3 | 6.3 | 6.3 |
| Risk-free\tinterest\trate | 5% | 4% | 4% |

The	Black-Scholes	option	valuation	model	was	developed	for	use	in	estimating	the	fair	value	of	traded	options	which	have	no	vesting	restrictions	and	are	fully transferable.	 In	 addition,	 option	 valuation	 models	 require	 the	 input	 of	 highly	subjective	 assumptions,	 including	 the	 expected	 stock	 price	 volatility.	 Because	the Company's	employee	stock	options	have	characteristics	significantly	different	from	those	of	traded	options,	and	because	changes	in	the	subjective	input	assumptions can	materially	affect	the	fair	value	estimate,	in	management's	opinion,	the	existing	models	do	not	necessarily	provide	a	reliable	single	measure	of	the	fair	value	of	its employee	stock	options.

The	aggregate	intrinsic	values	of	options	outstanding	and	exercisable	at	December	30,	2006	were	$204.1	million	and	$100.2	million,	respectively.	The aggregate	intrinsic	value	of	options	exercised	during	the	year	ended	December	30,	2006	was	$42.8	million.	Aggregate	intrinsic	value	represents	the	positive	difference between	the	Company's	closing	stock	price	on	the	last	trading	day	of	the	fiscal	period,	which	was	$55.66	on	December	29,	2006,	and	the	exercise	price	multiplied	by	the number	of	options	outstanding.

As	of	December	30,	2006,	there	was	$64.2	million	of	total	unrecognized	compensation	cost	related	to	unvested	share-based	compensation	awards	granted	to employees	under	the	option	plans.	That	cost	is	expected	to	be	recognized	over	a	period	of	five	years.

# Employee	Stock	Purchase	Plan

The	shareholders	also	adopted	an	employee	stock	purchase	plan	(ESPP).	Up	to	2,000,000	shares	of	common	stock	have	been	reserved	for	the	ESPP.	Shares	will be	offered	to	employees	at	a	price	equal	to	the	lesser	of	85%	of	the	fair	market	value	of	the	stock	on	the	date	of	purchase	or	85%	of	the	fair	market	value	on	the enrollment	date.	The	ESPP	is	intended	to	qualify	as	an	"employee	stock	purchase	plan"	under	Section	423	of	the	Internal	Revenue	Code.	During	2006,	2005,	and	2004, 124,693,	112,798,	and	117,900	shares	were	purchased	under	the	plan	for	a	total	purchase	price	of	$3,569,	$2,824,	and	$2,691,	respectively.	At	December	30,	2006, approximately	1,116,811	shares	were	available	for	future	issuance.

All	share	and	per	share	data	is	presented	post-split.	The	following	table	sets	forth	the	computation	of	basic	and	diluted	net	income	per	share:

|  | December	30,<br>2006 | December	31,<br>2005 | December	25,<br>2004 |
| :--- | :--- | :--- | :--- |
| Numerator\t(in\tthousands):\nNumerator\tfor\tbasic\tand\tdiluted\n\t\t\t\t\t\tnet\tincome\tper\tshare\t-\tnet\tincome | $514,123 | $311,219 | $205,700 |
| Denominator\t(in\tthousands): |  |  |  |
| Denominator\tfor\tbasic\tnet\tincome\tper\tshare\t-\n\t\t\t\t\t\tweighted-average\tcommon\tshares | 216,340 | 216,294 | 216,322 |
| Effect\tof\tdilutive\tsecurities\t-\n\t\t\t\t\t\temployee\tstock-based\tawards\t(note\t9) | 2,505 | 1,942 | 1,738 |
| Denominator\tfor\tdiluted\tnet\tincome\tper\tshare\t-\n\t\t\t\t\t\tadjusted\tweighted-average\tcommon\tshares | 218,845 | 218,236 | 218,060 |
| Basic\tnet\tincome\tper\tshare | $2.38 | $1.44 | $0.95 |
| Diluted\tnet\tincome\tper\tshare | $2.35 | $1.43 | $0.94 |

Options	to	purchase	757,000,	1,044,000,	and	1,110,000	shares	of	common	stock	were	outstanding	during	2006,	2005,	and	2004	respectively,	but	were	not	included	in the	computation	of	diluted	earnings	per	share	because	the	effect	was	antidilutive.

# 12.	Share	Repurchase	Program

The	Board	of	Directors	approved	a	share	repurchase	program	on	August	3,	2006,	authorizing	the	Company	to	purchase	up	to	3,000,000	of	its	common	shares as	market	and	business	conditions	warrant.	The	share	repurchase	authorization	expires	on	December	31,	2007.	As	of	December	30,	2006,	the	Company	had	repurchased 1,155,300	shares	using	cash	of	$50,450.	This	amount	was	reported	as	a	reduction	in	additional	paid-in	capital	because	companies	incorporated	in	the	Cayman	Islands	are not	permitted	by	law	to	hold	treasury	stock.

The	Board	of	Directors	approved	a	share	repurchase	program	on	April	21,	2004,	authorizing	the	Company	to	purchase	up	to	6,000,000	million	of	its	common shares	as	market	and	business	conditions	warrant.	The	share	repurchase	authorization	expired	on	April	30,	2006.	From	inception	to	expiration,	1,476,000	shares	were repurchased	and	retired	under	this	plan.

# 13.	Shareholder	Rights	Plan

On	October	24,	2001,	Garmin's	Board	of	Directors	adopted	a	shareholder	rights	plan	(the	"Rights	Plan").	Pursuant	to	the	Rights	Plan,	the	Board	declared	a dividend	of	one	preferred	share	purchase	right	on	each	outstanding	common	share	of	Garmin	to	shareholders	of	record	as	of	November	1,	2001.	The	rights	trade	together with	Garmin's	common	shares.	The	rights	generally	will	become	exercisable	if	a	person	or	group	acquires	or	announces	an	intention	to	acquire	15%	or	more	of Garmin's	outstanding	common	shares.	Each	right	(other	than	those	held	by	the	new	15%	shareholder)	will	then	be	exercisable	to	purchase	preferred	shares	of	Garmin (or	in	certain	instances	other	securities	of	Garmin)	having	at	that	time	a	market	value	equal	to	two	times	the	then	current	exercise	price.	Garmin's	Board	of	Directors	may redeem	the	rights	at	$0.001	per	right	at	any	time	before	the	rights	become	exercisable.	The	rights	expire	on	October	31,	2011.

# 14.	Selected	Quarterly	Information	(Unaudited,	split	adjusted)

# Fiscal	Year	Ended	December	30,	2006

|  | April	1 | Quarter	Ending<br>July	1 | September	30 | December	30 |
| :--- | :--- | :--- | :--- | :--- |
| Net\tsales | $322,311 | $432,468 | $407,997 | $611,224 |
| Gross\tprofit | 162,790 | 216,284 | 198,860 | 304,452 |
| Net\tincome | 87,516 | 123,286 | 122,978 | 180,343 |
| Basic\tnet\tincome\tper\tshare | $0.40 | $0.57 | $0.57 | $0.84 |

|  |  | Fiscal	Year	Ended	December	31,	2005 | Fiscal	Year	Ended	December	31,	2005 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | March\t26 | Quarter\tEnding\nJune\t25 | September\t24 | December\t31 |
| Net\tsales | $192,651 | $264,497 | $251,329 | $319,296 |
| Gross\tprofit | 103,198 | 139,981 | 129,452 | 162,439 |
| Net\tincome | 47,400 | 74,194 | 102,490 | 87,135 |
| Basic\tnet\tincome\tper\tshare | $0.22 | $0.34 | $0.48 | $0.40 |

The	above	quarterly	financial	data	is	unaudited,	but	in	the	opinion	of	management,	all	adjustments	necessary	for	a	fair	presentation	of	the	selected	data	for	these interim	periods	presented	have	been	included.	These	results	are	not	necessarily	indicative	of	future	quarterly	results.

# 15.	Dynastream	Innovations	Inc.	Acquisition

On	November	30,	2006,	the	Company	acquired	Dynastream	Innovations	Inc.	("Dynastream")	for	$36.5	million.	Dynastream,	headquartered	in	Alberta,	Canada, provides	personal	monitoring	technology	(such	as	foot	pods	and	heart	rate	monitors)	for	sports	and	fitness	products,	and	also	provides	low	power	and	low	cost	wireless connectivity	solutions.	Dynastream	products	are	used	in	some	of	the	Company's	Forerunner	devices.	The	purchase	price	was	allocated	primarily	to	technology/patents, customer	contracts,	goodwill	and	other	assets,	less	liabilities	assumed.

# 16.	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:

|  | December	30,<br>2006 | Fiscal	Year	Ended<br>December	31,<br>2005 | December	25,<br>2004 |
| :--- | :--- | :--- | :--- |
| Balance\t-\tbeginning\tof\tperiod | $18,817 | $15,518 | $8,399 |
| Accrual\tfor\tproducts\tsold\tduring\tthe\tperiod | 51,080 | 18,037 | 24,622 |
| Expenditures | (32,258) | (14,738) | (17,503) |
| Balance\t-\tend\tof\tperiod | $37,639 | $18,817 | $15,518 |

# Item	9.	Changes	in	and	Disagreements	with	Accountants	on	Accounting	and	Financial	Disclosure

# Item	9A.	Controls	and	Procedures

# (a)	Conclusion	Regarding	the	Effectiveness	of	Disclosure	Controls	and	Procedures

Under	the	supervision	and	with	the	participation	of	our	management,	including	the	Chief	Executive	Officer	and	Chief	Financial	Officer,	we	have	evaluated	the effectiveness	of	the	design	and	operation	of	our	disclosure	controls	and	procedures	pursuant	to	Exchange	Act	Rule	13a-15(b)	as	of	the	end	of	the	period	covered	by	this report.	Based	on	the	evaluation,	the	Chief	Executive	Officer	and	Chief	Financial	Officer	have	concluded	that	these	disclosure	controls	and	procedures	are	effective.

# (b)	Management's	Report	on	Internal	Control	over	Financial	Reporting

Management	of	 the	 Company	 is	 responsible	 for	 establishing	 and	 maintaining	 adequate	 internal	control	 over	 financial	 reporting	 for	 the	 Company.	 The Company's	 internal	 control	over	financial	reporting	 is	a	process	designed	 to	provide	reasonable	assurance	regarding	 the	reliability	of	financial	reporting	and	 the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the policies	or	procedures	may	deteriorate.

Management	of	the	Company	assessed	the	effectiveness	of	the	Company's	internal	control	over	financial	reporting	as	of	December	30,	2006.	In	making	this assessment,	management	used	the	criteria	set	forth	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO)	in	"Internal	Control-Integrated Framework".

Based	on	such	assessment	and those	criteria,	management	believes that the	Company	maintained	effective	internal	control	over	financial	reporting	as	of December	30,	2006.

Ernst	&	Young	LLP,	the	independent	registered	public	accounting	firm	that	audited	 the	Company's	consolidated	financial	statements,	issued	an	attestation report	on	management's	assessment	of	the	Company's	internal	control	over	financial	reporting.	That	attestation	report	appears	below.

# (c)	Attestation	Report	of	the	Independent	Registered	Public	Accounting	Firm

# Report	of	Independent	Registered	Public	Accounting	Firm	on	Internal	Control	over	Financial	Reporting

We	have	audited	management's	assessment,	included	in	the	accompanying	Management's	Report	on	Internal	Control	over	Financial	Reporting,	that	Garmin	Ltd.	and Subsidiaries	 maintained	 effective	 internal	 control	 over	 financial	 reporting	as	of	 December	 30,	 2006,	 based	 on	 criteria	 established	 in	 Internal	Control—Integrated Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(the	COSO	criteria).	Garmin	Ltd.	and	Subsidiaries'	management	is responsible	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the	effectiveness	of	internal	control	over	financial	reporting.	Our responsibility	is	to	express	an	opinion	on	management's	assessment	and	an	opinion	on	the	effectiveness	of	the	company's	internal	control	over	financial	reporting	based on	our	audit.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan	and perform	the	audit	to	obtain	reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audit included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	evaluating	management's	assessment,	testing	and	evaluating	the	design	and	operating effectiveness	of	internal	control,	and	performing	such	other	procedures	as	we	considered	necessary	in	the	circumstances.	We	believe	that	our	audit	provides	a	reasonable basis	for	our	opinion.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	 and	 directors	o f	the	 company;	 and	 (3)	 provide	 reasonable	 assurance	 regarding	 prevention	 or	timely	detection	 of	 unauthorized	 acquisition,	 use,	 or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

In	our	opinion,	management's	assessment	that	Garmin	Ltd.	and	Subsidiaries	maintained	effective	internal	control	over	financial	reporting	as	of	December	30,	2006,	is fairly	stated,	in	all	material	respects,	based	on	the	COSO	criteria.	Also,	in	our	opinion,	Garmin	Ltd.	and	Subsidiaries	maintained,	in	all	material	respects,	effective internal	control	over	financial	reporting	as	of	December	30,	2006,	based	on	the	COSO	criteria.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	balance	sheets	of	Garmin Ltd.	and	Subsidiaries	as	of	December	30,	2006	and	December	31,	2005,	and	the	related	consolidated	statements	of	income,	stockholders'	equity,	and	cash	flows	for	each of	the	three	years	in	the	period	ended	December	30,	2006	of	Garmin	Ltd.	and	Subsidiaries	and	our	report	dated	February	27,	2007	expressed	an	unqualified	opinion thereon.

# (d)	Changes	in	Internal	Control	over	Financial	Reporting

There	were	no	changes	in	our	internal	control	over	financial	reporting	during	the	year	ended	December	30,	2006	that	have	materially	affected,	or	are	reasonably likely	to	materially	affect,	our	internal	control	over	financial	reporting

# Item	9B.	Other	Information

Not	applicable.

# PART	III

# Item	10.	Directors,	Executive	Officers	and	Corporate	Governance

Garmin	has	incorporated	by	reference	certain	information	in	response	or	partial	response	to	the	Items	under	this	Part	III	of	this	Annual	Report	on	Form	10-K pursuant	to	General	Instruction	G(3)	of	this	Form	10-K	and	Rule	12b-23	under	the	Exchange	Act.	Garmin's	definitive	proxy	statement	in	connection	with	its	annual meeting	of	shareholders	scheduled	for	June	8,	2007	(the	"Proxy	Statement")	will	be	filed	with	the	Securities	and	Exchange	Commission	no	later	than	120	days	after December	30,	2006.

# (a) Directors	of	the	Company

The	information	set	forth	in	response	to	Item	401	of	Regulation	S-K	under	the	headings	"Proposal	-	Election	of	Two	Directors"	and	"The	Board	of	Directors"	in the	Proxy	Statement	is	hereby	incorporated	herein	by	reference	in	partial	response	to	this	Item	10.

# (b) Executive	Officers	of	the	Company

The	information	set	forth	in	response	to	Item	401	of	Regulation	S-K	under	the	heading	"Executive	Officers	of	the	Registrant"	in	Part	I	of	this	Form	10-K	is incorporated	herein	by	reference	in	partial	response	to	this	Item	10.

# (c) Compliance	with	Section	16(a)	of	the	Exchange	Act

The	information	set	forth	in	response	to	Item	405	of	Regulation	S-K	under	the	heading	"Section	16(a)	Beneficial	Ownership	Reporting	Compliance"	in	the	Proxy Statement	is	hereby	incorporated	herein	by	reference	in	partial	response	to	this	Item	10.

# (d) Audit	Committee	and	Audit	Committee	Financial	Expert

The	information	set	forth	in	response	to	Item	402	of	Regulation	S-K	under	the	heading	"The	Board	of	Directors	--	Audit	Committee"	in	the	Proxy	Statement	is hereby	incorporated	herein	by	reference	in	partial	response	to	this	Item	10.

Garmin's	Board	of	Directors	has	determined	that	Gene	M.	Betts,	Charles	W.	Peffer,	and	Thomas	A.	McDonnell,	members	of	Garmin's	Audit	Committee,	are "audit	committee	financial	experts"	as	defined	by	the	SEC	regulations	implementing	Section	407	of	the	Sarbanes-Oxley	Act	of	2002.	Mr.	Betts,	Mr.	Peffer	and	Mr. McDonnell	are	each	"independent"	as	defined	by	current	listing	standards	of	the	Nasdaq	Stock	Market.

# (e) Code	of	Ethics

Garmin's	Board	of	Directors	has	adopted	the	Code	of	Business	Conduct	and	Ethics	for	Directors,	Officers	and	Employees	of	Garmin	Ltd.	and	Subsidiaries	(the "Code").	The	Code	is	applicable	to	all	Garmin	employees	including	the	Chief	Executive	Officer,	the	Chief	Financial	Officer,	the	Controller	and	other	officers.	A	copy	of the	Code	was	filed	as	Exhibit	14.1	of	the	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	25,	2004	and	incorporated	by	reference	herein	and	listed	as Exhibit	14.1	to	this	Annual	Report	on	Form	10-K.	If	any	amendments	to	the	Code	are	made,	or	any	waivers	with	respect	to	the	Code	are	granted	to	the	Chief	Executive Officer,	Chief	Financial	Officer	or	Controller,	such	amendment	or	waiver	will	be	disclosed	in	a	Form	8-K	filed	with	the	Securities	and	Exchange	Commission.

# Item	11.	Executive	Compensation

The	information	set	forth	in	response	to	Item	402	of	Regulation	S-K	under	the	headings	"Executive	Compensation	Matters"	and	"The	Board	of	Directors	-- Compensation	of	Directors"	in	the	Proxy	Statement	is	hereby	incorporated	herein	by	reference	in	partial	response	to	this	Item	11.

The	information	set	forth	in	response	to	Item	407(e)(4)	of	Regulation	S-K	under	the	heading	"The	Board	of	Directors	--	Compensation	Committee	Interlocks and	Insider	Participation;	Certain	Relationships"	in	the	Proxy	Statement	is	hereby	incorporated	herein	by	reference	in	partial	response	to	this	Item	11.

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

# Item	12.	Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters

The	information	set	forth	in	response	to	Item	403	of	Regulation	S-K	under	the	heading	"Stock	Ownership	of	Certain	Beneficial	Owners	and	Management"	in the	Proxy	Statement	is	hereby	incorporated	herein	by	reference	in	partial	response	to	this	Item	12.

# Equity	Compensation	Plan	Information

The	following	table	gives	information	as	of	December	30,	2006	about	the	Garmin	common	shares	that	may	be	issued	under	all	of	the	Company's	existing equity	compensation	plans,	as	adjusted	for	stock	splits.

|  | A | B | C |
| :--- | :--- | :--- | :--- |
|  |  |  | Number\tof\tsecurities |
| Plan\tCategory | Number\tof\tsecurities\tto\tbe | Weighted-average | remaining\tavailable\tfor\nfuture\tissuance\tunder |
|  | issued\tupon\texercise\tof | exercise\tprice\tof | equity\tcompensation |
|  | outstanding\toptions, | outstanding\toptions, | plans\t(excluding |
|  | warrants\tand\trights | warrants\tand\trights | securities\treflected\tin |
|  |  |  | column\tA) |
| Equity\tcompensation |  |  |  |
| plans\tapproved\tby | 7,725,826 | $29.24 | 7,950,885 |
| shareholders\t(1) |  |  |  |
| Equity\tcompensation |  |  |  |
| plans\tnot\tapproved\tby | -- | -- | -- |
| shareholders |  |  |  |
| Total | 7,725,826 | $29.24 | 7,950,885 |

(1)	Consists	of	the	Garmin	Ltd.	2005	Equity	Incentive	Plan,	the	Garmin	Ltd.	2000	Equity	Incentive	Plan,	the	Garmin	Ltd.	2000	Non-Employee	Directors' Option	Plan	and	the	Garmin	Ltd.	Employee	Stock	Purchase	Plan.

The	Company	has	no	knowledge	of	any	arrangement,	the	operation	of	which	may	at	a	subsequent	date	result	in	a	change	in	control	of	the	Company.

# Item	13.	Certain	Relationships	and	Related	Transactions,	and	Director	Independence

The	information	set	forth	in	response	to	Item	404	of	Regulation	S-K	under	the	heading	"Compensation	Committee	Interlocks	and	Insider	Participation;	Certain Relationships"	in	the	Proxy	Statement	is	incorporated	herein	by	reference	in	partial	response	to	this	Item	13.

The	information	set	forth	in	response	to	Item	407(a)	of	Regulation	S-K	under	the	headings	"Proposal	--	Election	of	Two	Directors"	and	"The	Board	of Directors"	in	the	Proxy	Statement	is	hereby	incorporated	herein	by	reference	in	partial	response	to	this	Item	13.

# Item	14.	Principal	Accounting	Fees	and	Services

The	information	set	forth	under	the	headings	"Audit	Matters	--	Independent	Registered	Public	Accounting	Firm	Fees"	and	"Pre-Approval	of	Services	Provided by	the	Independent	Auditor"	in	the	Proxy	Statement	is	hereby	incorporated	by	reference	in	response	to	this	Item	14.

# PART	IV

# Item	15.	Exhibits,	and	Financial	Statement	Schedules

# (a) List	of	Documents	filed	as	part	of	this	Report

The	consolidated	financial	statements	and	related	notes,	together	with	the	report	of	Ernst	&	Young	LLP,	appear	in	Part	II,	Item	8	"Financial	Statements	and Supplementary	Data"	of	this	Form	10-K.

# (2) Schedule	II	Valuation	and	Qualifying	Accounts

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

(3) Exhibits	--	The	following	exhibits	are	filed	as	part	of,	or	incorporated	by	reference	into,	this	Annual	Report	on	Form	10-K:

10.3 Form	of	Stock	Option	Agreement	pursuant	to	the	Garmin	Ltd.	2000	Equity	Incentive	Plan	for	Employees	of	Garmin	Corporation (incorporated	by	reference	to	Exhibit	10.3	of	the	Registrant's	Current	Report	on	Form	8-K	filed	on	September	7,	2004).

10.4 Form	of	Stock	Option	Agreement	pursuant	to	the	Garmin	Ltd.	2000	Equity	Incentive	Plan	for	UK-Approved	Stock	Options	for	Employees	of Garmin	(Europe)	Ltd.	(incorporated	by	reference	to	Exhibit	10.4	of	the	Registrant's	Current	Report	on	Form	8-K	filed	on	September	7, 2004).

10.5 Form	of	Stock	Option	Agreement	pursuant	to	the	Garmin	Ltd.	2000	Equity	Incentive	Plan	for	Non	UK-Approved	Stock	Options	for Employees	of	Garmin	(Europe)	Ltd.	(incorporated	by	reference	to	Exhibit	10.5	of	the	Registrant's	Current	Report	on	Form	8-K	filed	on September	7,	2004).

10.6 Garmin	Ltd.	2000	Non-Employee	Directors'	Option	Plan	(incorporated	by	reference	to	Exhibit	10.2	of	the	Registrant's	Registration Statement	on	Form	S-1	filed	December	6,	2000	(Commission	File	No.	333-45514)).

10.7 Form	of	Stock	Option	Agreement	pursuant	to	the	Garmin	Ltd.	Non-Employee	Directors'	Option	Plan	for	Non-Employee	Directors	of Garmin	Ltd.	(incorporated	by	reference	to	Exhibit	10.2	of	the	Registrant's	Current	Report	on	Form	8-K	filed	on	September	7,	2004).

10.8 Garmin	Ltd.	Amended	and	Restated	Employee	Stock	Purchase	Plan	(incorporated	by	reference	to	Exhibit	10.1	of	the	Registrant's	Quarterly Report	on	Form	10-Q	filed	August	9,	2006.

Chief	Executive	Officer's	Certification	pursuant	to	Section	906	of	the	Sarbanes-Oxley	Act	of	2002.

32.2 Chief	Financial	Officer's	Certification	pursuant	to	Section	906	of	the	Sarbanes-Oxley	Actof	2002

# (b) Exhibits.

The	exhibits	listed	on	the	accompanying	Exhibit	Index	in	Item	15(a)(3)	are	filed	as	part	of,	or	are	incorporated	by	reference	into,	this	Annual	Report	on	Form	10-

# (c) Financial	Statement	Schedules.

Reference	is	made	to	Item	15(a)(2)	above.

# INDEX	TO	FINANCIAL	STATEMENT	SCHEDULE

Garmin	Ltd.	Financial	Statement	Schedule	for	the	years	ended	December	30,	2006,	December	31,	2005	and	December	25,	2004

| Description | Balance	at<br>Beginning	of<br>Period | Charged	to<br>Costs	and<br>Expenses | Charged	to<br>Other<br>Accounts | Deductions | Balance	at<br>End	of<br>Period |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Year\tEnded\tDecember\t25,\t2004: |  |  |  |  |  |
| \t\t\tDeducted\tfrom\tasset\taccounts |  |  |  |  |  |
| \t\t\t\t\t\tAllowance\tfor\tdoubtful\taccounts | $3,576 | $187 | - | ($198) | $3,565 |
| \t\t\t\t\t\tInventory\treserve | 11,485 | 7,158 | - | (7,354) | 11,289 |
| Total | $15,061 | $7,345 | - | ($7,552) | $14,854 |
| Year\tEnded\tDecember\t31,\t2005: |  |  |  |  |  |
| \t\t\tDeducted\tfrom\tasset\taccounts |  |  |  |  |  |
| \t\t\t\t\t\tAllowance\tfor\tdoubtful\taccounts | $3,565 | $445 | - | $216 | $4,226 |
| \t\t\t\t\t\tInventory\treserve | 11,289 | 14,755 | - | (11,288) | 14,756 |
| Total | $14,854 | $15,200 | - | ($11,072) | $18,982 |
| Year\tEnded\tDecember\t30,\t2006: |  |  |  |  |  |
| \t\t\tDeducted\tfrom\tasset\taccounts |  |  |  |  |  |
| \t\t\t\t\t\tAllowance\tfor\tdoubtful\taccounts | $4,226 | $955 | - | $159 | $5,340 |
| \t\t\t\t\t\tInventory\treserve | 14,756 | 23,245 | - | (18,233) | 19,768 |
| Total | $18,982 | $24,200 | - | ($18,074) | $25,108 |

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	registrant	has	duly	caused	this	report	to	be	signed	on	its	behalf by	the	undersigned,	thereunto	duly	authorized.

# POWER	OF	ATTORNEY

Know	all	persons	by	these	presents,	that	each	person	whose	signature	appears	below	constitutes	and	appoints	Min	H.	Kao	and	Kevin	Rauckman	and	Andrew	R. Etkind,	and	each	of	them,	as	his	attorney-in-fact,	with	the	power	of	substitution,	for	him	in	any	and	all	capacities,	to	sign	any	amendments	to	this	Annual	Report	on	Form 10-K,	and	to	file	the	same,	with	exhibits	thereto	and	other	documents	in	connection	therewith,	with	the	Securities	and	Exchange	Commission,	hereby	ratifying	and confirming	all	that	said	attorney-in-fact,	or	his	substitute	or	substitutes,	may	do	or	cause	to	be	done	by	virtue	hereof.

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	Annual	Report	on	Form	10-K	has	been	signed	below	by	the	following	persons	on behalf	of	the	registrant	and	in	the	capacities	indicated	on	February	28,	2007:

Min	H.	Kao

Chairman,	Chief

Executive	Officer	and	Director (Principal	Executive	Officer)

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

/s/	Charles	W.	Peffer Charles	W.	Peffer Director

/s/	Clifton	A.	Pemble

Clifton	A	Pemble

Director

Gene	M.	Betts

/s/Donald	H.	Eller Donald	H.	Eller Director

/s/	Thomas	A.	McDonnell Thomas	A.	McDonnell Director

# Exhibit	Index

The	following	exhibits	are	attached	hereto.	See	Part	IV	of	this	Annual	Report	on	Form	10-K	for	a	complete	list	of	exhibits.



Question: what is the decrease observed in the operating leases with payments due to 3-5 years and payments due to more than 5 years?
Calculation:   leases_less_than_1_year = 15477
 leases_1_to_3_years = 6271
 leases_3_to_5_years = 6040
 leases_more_than_5_years = 15477
total_leases = leases_less_than_1_year + leases_1_to_3_years + leases_3_to_5_years + leases_more_than_5_years
answer = leases_less_than_1_year - leases_3_to_5_years
Answer: 9437