Financial overview from Kevin Rauckman, Chief Financial Officer:

“Revenue growth in four of our five segments illustrates the ongoing diversification of our business model,” said Kevin Rauckman, Chief Financial Officer of Garmin Ltd. “We now have five distinct segments, each contributing to the earnings and strong free cash flow generation of the organization.

Gross margin for the overall business in the second quarter decreased year-over-year to 48%. In 2010, we benefited from the refinement of our warranty estimate which contributed 290 basis points to gross margin across the segments. Deferred gross profit of $51 million compared to $19 million in the year-ago quarter, associated with product mix shifting toward bundled products, was also a primary driver with a negative impact of 200 basis points year-over-year.

Operating margin was 20% in the quarter. Total operating expenses increased by $1 million on a year-over-year basis. Advertising and research and development expenses decreased by $8 and $3 million, respectively. Other selling, general and administrative expenses increased by $12 million, or 16%, driven primarily by bad debt expense, legal costs and product support costs. Approximately $8 million of these expenses are one-time in nature.

We generated $196 million of free cash flow in the second quarter of 2011. We had a cash and marketable securities balance of almost $2.5 billion at the end of the quarter, of which approximately $155 million was used to pay the June 30 dividend installment of $0.80 per share.”

2011 Full-Year Guidance

We now expect revenue in 2011 between $2.5 and $2.6 billion with the improvement driven primarily by the acquisitions of Navigon and Tri-Tronics. While slightly increasing our revenue range, we are reducing our EPS range due to the accelerating deferral of high margin revenues and associated costs. These factors and an anticipated effective tax rate of approximately 12% result in a forecasted 2011 EPS of $2.00 - $2.15.

Non-GAAP Measures

Pro Forma net income (earnings) per share

Management believes that net income per share before the impact of foreign currency translation gain or loss and other one-time items is an important measure. The majority of the Company’s consolidated foreign currency gain or loss results from transactions involving the Euro, the British Pound Sterling and the Taiwan Dollar and from the exchange rate impact of the significant cash and marketable securities, receivables and payables held in U.S. dollars at the end of each reporting period by the Company’s various non U.S. subsidiaries. Such gain or loss is required under GAAP because the functional currency of the subsidiaries differs from the currency in which various assets and liabilities are held. However, there is minimal cash impact from such foreign currency gain or loss. Accordingly, earnings per share before the impact of foreign currency translation gain or loss allow an assessment of the Company’s operating performance before the non-cash impact of the position of the U.S. Dollar versus other currencies, which permits a consistent comparison of results between periods.