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United States
Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 25, 2004

or

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

For the transition period from ______ to ______

Commission file number 0-31983
_________________

GARMIN LTD.
(Exact name of Company as specified in its charter)

        Company’s telephone number, including area code: (345) 946-5203

No Changes

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

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2
of the Exchange Act). YES [x] NO [ ]

Number of shares outstanding of the Company's common shares as of October 29, 2004:
Common Shares, $.01 par value 108,143,628

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Garmin Ltd.
Form 10-Q
Quarter Ended September 25, 2004

Table of Contents

      Part I — Financial Information                                                                                Page

Part II — Other Information

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Garmin Ltd.
Form 10-Q
Quarter Ended September 25, 2004

Part I – Financial Information

Item 1. Condensed Consolidated Financial Statements (Unaudited)

Introductory Comments

        The Condensed Consolidated Financial Statements of Garmin Ltd. (“Garmin” or the “Company”) included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented. These Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 27, 2003. Additionally, the Condensed Consolidated Financial Statements should be read in conjunction with Item 2 of Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in this Form 10-Q.

        The results of operations for the 13- and 39-week periods ended September 25, 2004 are not necessarily indicative of the results to be expected for the full year 2004.

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Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share information)

See accompanying notes.

4

   Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share information)

See accompanying notes.

5

Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

See accompanying notes.

6

Garmin Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 25, 2004
(In thousands, except share and per share information)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the 13- and 39-week periods ended September 25, 2004 are not necessarily indicative of the results that may be expected for the year ended December 25, 2004.

The condensed consolidated balance sheet at December 27, 2003 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 27, 2003.

The Company’s fiscal year is based on a 52-53 week period ending on the last Saturday of the calendar year. Therefore the financial results of certain fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated quarters having only 13 weeks. The quarters ended September 25, 2004 and September 27, 2003 both contain operating results for 13 weeks.

2. Inventories

The components of inventories consist of the following:

3. Stock Purchase Plan

The Board of Directors approved a share repurchase program on April 21, 2004, authorizing the Company to purchase up to 3.0 million shares of Garmin Ltd.‘s common stock as market and business conditions warrant. The share repurchase authorization expires on April 30, 2006. 100,000 shares have been repurchased and retired under this plan as of September 25, 2004. These amounts have been 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.

4. Long Term Debt

Garmin had no long-term debt as of September 25, 2004 or December 27, 2003.

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5. Earnings Per Share

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share information):

There were 1,255,827 antidilutive options for the 13-week period and 39-week period ended September 25, 2004.

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6. Comprehensive Income

Comprehensive income is comprised of the following (in thousands):

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7. Segment Information

Revenues and income before income taxes for each of the Company’s reportable segments are presented below:

Revenues and long-lived assets (property and equipment) by geographic area are as follows for the 39-week periods ended September 25, 2004 and September 27, 2003:

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8. Stock Compensation Plans

Accounting for Stock-Based Compensation

        At September 25, 2004, the Company has two stock-based employee compensation plans. The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. 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.

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2000 Non-employee Directors’ Option Plan

        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 50,000 common shares of the Company’s stock. The term of each award is ten years. All awards vest evenly over a three-year period. During 2004 and 2003, options to purchase 6,621 and 3,648 shares, respectively were granted under this plan.

2000 Equity Incentive Plan

        Also in October 2000, the stockholders 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 3,500,000 shares of common stock are available for issuance. The stock options generally vest 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. Option activity under the Plan during 2004 and 2003 is summarized below. There have been no “other” stock compensation awards granted under the Plan.

        A summary of the Company’s stock option activity and related information under the Plan and the Directors’ Plan for the period ended September 25, 2004 and year ended December 27, 2003 is provided below:

        There were 688,529 and 2,500 options granted during the 13-week periods ended September 25, 2004 and September 27, 2003, respectively.

        The weighted-average remaining contract life for options outstanding at September 25, 2004 is 8.15 years. Options outstanding at September 25, 2004 have exercise prices ranging from $14.00 to $54.54. At September 25, 2004, options to purchase 610,941 shares are exercisable.

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9. 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.

10. Commitments

Pursuant to certain supply agreements, the Company is contractually committed to make purchases of approximately $20 million over the next 3 years.

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

        The discussion set forth below, as well as other portions of this Quarterly Report, contains statements concerning potential future events. Such forward-looking statements are based upon assumptions by our management, as of the date of this Quarterly Report, including assumptions about risks and uncertainties faced by the Company. Readers can identify these forward-looking statements by their use of such verbs as expects, anticipates, believes or similar verbs or conjugations of such verbs. If any of our assumptions prove incorrect or should unanticipated circumstances arise, our actual results could materially differ from those anticipated by such forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to, those factors identified in the Company’s Annual Report on Form 10-K for the year ended December 27, 2003. This report has been filed with the Securities and Exchange Commission (the “SEC” or the “Commission”) in Washington, D.C. and can be obtained by contacting the SEC’s public reference operations or obtaining it through the SEC’s web site on the World Wide Web at http://www.sec.gov. Readers are strongly encouraged to consider those factors when evaluating any forward-looking statement concerning the Company. The Company will not update any forward-looking statements in this Quarterly Report to reflect future events or developments.

        The information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included in this Form 10-Q and the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 27, 2003.

        The Company is a leading worldwide provider of navigation, communications and information devices, most of which are enabled by Global Positioning System, or GPS, technology. We operate in two business segments, the consumer and aviation markets. Both of our segments offer products through our network of independent dealers and distributors. However, the nature of products and types of customers for the two segments vary significantly. As such, the segments are managed separately. Our consumer segment includes portable GPS receivers and accessories for marine, recreation, land and automotive use 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.

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Results of Operations

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

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        The following table sets forth our results of operations (in thousands) for each of our two segments through income before income taxes during the periods shown. For each line item in the table, the total of the consumer and aviation segments’ amounts equals the amount in the condensed consolidated statements of income included in Item 1.

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Comparison of 13-Weeks Ended September 25, 2004 and September 27, 2003

Net Sales

        Increases in consumer sales for the 13-week period ended September 25, 2004 were primarily due to increased demand across all product lines. Increases in aviation sales were due to revenues from both panel-mount and portable products and Garmin AT sales for the 13-week period ended September 25, 2004. Approximately 45% of sales in the third quarter of 2004 were generated from products introduced in the last twelve months.

        Total consumer and aviation unit sales increased 4% to 540,000 in the third quarter of 2004 from 517,000 in the same period of 2003. The higher unit sales volume in the third quarter of fiscal 2004 was primarily attributable to the introduction of new products in the prior twelve months, as well as strength in our existing product lines. Unit growth occurred in both consumer and aviation segments, however the average unit price also increased as well.

Gross Profit

        Gross profit improvements within the consumer segment in the quarter ended September 25, 2004, when compared to the same quarter in 2003, was driven primarily by improved product mix within the segment.

        Aviation gross margin improvements were primarily a result of favorable product mix versus the same quarter of 2003 and a $1.8 million payment to Garmin AT for the completion of a government contract.

Selling, General and Administrative Expenses

        The increase in expense was driven primarily by increased advertising costs ($4.5 million), increased marketing and operating costs ($1.0 million), Oracle consulting costs ($0.9 million), and Garmin AT selling, general and administrative costs ($0.5 million).

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Research and Development Expense

        The increase in expense was due to ongoing development activities for new products, and the addition of 10 new engineering personnel to our staff during the third quarter of 2004 as a result of our continued emphasis on product innovation. Aviation research and development costs increases came from both our core technology activities and from Garmin AT.

Operating Income

        Operating income rose as a percent of revenue as a result of product mix shift that included more sales of new, higher-margin products, offset in part by increased research and development costs, increased marketing costs, and Oracle implementation costs.

Other Income (Expense)

        The average taxable equivalent interest rate return on invested cash during the third quarter of 2004 was 1.6% compared to 1.4% during the same quarter of 2003.

        The $4.4 million currency gain was due to the strengthening of the U.S. Dollar compared to the Taiwan Dollar during the third quarter of fiscal 2004, when the exchange rate increased to 33.99 TD/USD at September 25, 2004 from 33.68 TD/USD at June 26, 2004. The $9.0 million loss in the same quarter of 2003 was due to the weakness of the U.S. Dollar compared to the Taiwan Dollar during the third quarter of fiscal 2003, when the exchange rate decreased to 33.79 TD/USD at September 27, 2003 from 34.61 TD/USD at June 28, 2003.

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Income Tax Provision

        Income tax expense increased by $7.4 million, to $16.8 million, for the 13-week period ended September 25, 2004 from $9.4 million for the 13-week period ended September 27, 2003 due to our higher income before taxes. The effective tax rate fell to 20% from 21% due to incremental tax holidays applied for in Taiwan this year.

Net Income

        As a result of the above, net income increased 90% for the 13-week period ended September 25, 2004 to $67.1 million compared to $35.3 million for the 13-week period ended September 27, 2003.

Comparison of 39-weeks Ended September 25, 2004 and September 27, 2003

Net Sales

        Increases in consumer sales for the 39-week period ended September 25, 2004 were primarily due to increased demand across all product lines. Increases in aviation sales were due to revenues from new product releases and Garmin AT sales for the 39-week period ended September 25, 2004.

        Total consumer and aviation unit sales increased 8% to 1,587,000 year-to-date for 2004 from 1,476,000 in the same period of 2003. The higher unit sales volume year-to-date for fiscal 2004 was primarily attributable to the introduction of new products in the prior twelve months, as well as strength in our existing product lines. Unit growth occurred in both the consumer and aviation segments.

Gross Profit

        Gross margin changes within the consumer segment in the nine-month period ended September 25, 2004, when compared to the same period in 2003, were driven primarily by:

     —   Product mix changes, as certain new, popular lower-margin products sold well during the period,
     —   Higher product transition costs during the period due to the introduction of 44 new products during the period,
           36 of which occurred in the first half of 2004, and
     —   Raw materials price increases in the early part of the period, which only recently began to improve.

        Aviation gross margins were primarily impacted by certain program costs associated with the G1000 cockpit and the contribution of the Garmin AT business, which generates lower gross margin than the rest of the aviation segment, partially offset by favorable product mix due to the introduction of higher margin portable aviation products sold within the segment.

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Selling, General and Administrative Expenses

        The increase in expense was driven primarily by increased call center expenses ($0.5 million), increased marketing and operating costs ($3.0 million), Oracle implementation costs ($1.8 million), Garmin AT selling, general and administrative costs ($2.6 million), and increased advertising costs ($7.0 million).

Research and Development Expense