Kerri Thurston - Director of Investor Relations Clifton A. Pemble - President, Chief Operating Officer, Director, President of Garmin International Inc, President of Garmin USA Inc and President of Garmin AT Inc Kevin S. Rauckman - Chief Financial Officer, Principal Accounting Officer, Treasurer, Treasurer of Garmin International Inc, Treasurer of Garmin Usa Inc, Director of Garmin International Inc and Director of Garmin Usa Inc

Mark Sue - RBC Capital Markets, LLC, Research Division John F. Bright - Avondale Partners, LLC, Research Division Yair Reiner - Oppenheimer & Co. Inc., Research Division Scott P. Sutherland - Wedbush Securities Inc., Research Division Charles L. Anderson - Dougherty & Company LLC, Research Division Simona Jankowski - Goldman Sachs Group Inc., Research Division James E. Faucette - Pacific Crest Securities, Inc., Research Division Jonathan Goldberg - Deutsche Bank AG, Research Division Richard Valera - Needham & Company, LLC, Research Division Michael Holt - Morningstar Inc., Research Division

Good day, and welcome, everyone, to the Garmin Ltd. Second Quarter 2012 Earnings Conference Call. Today's call is being recorded. At this time, I'd like to turn the conference over to Kerri Thurston. Please go ahead, ma'am.

Thank you, and good morning, everyone. We'd like to welcome you to Garmin Ltd. Second Quarter 2012 Earnings Call. Please note that a copy of the press release concerning this earnings call is available at Garmin's Investor Relations site on the Internet at www.garmin.com/stock. Additionally, this call is being broadcast live on the Internet. Please note that this webcast does include slides, which can be viewed during this call. An archive of the webcast will be available until October 1, and a transcript to the call will be available on the website under the Events calendar. This earnings call includes projections and other forward-looking statements regarding Garmin Ltd. and its business. Any statements regarding our future financial position, revenues, earnings, market share, product introductions, future demand for our products and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this earnings call may not occur, and actual results could differ materially as a result of risk factors affecting Garmin. Information concerning these risk factors is contained in our Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission. Attending today's call on behalf of Garmin Ltd. are Dr. Min Kao, Chairman and Chief Executive Officer; Cliff Pemble, President and Chief Operating Officer; and Kevin Rauckman, Chief Financial Officer and Treasurer. The presenters for this morning's call are Cliff and Kevin. At this time, I'd like to turn the call over to Cliff. Clifton A. Pemble: Thank you, Kerri, and good morning, everyone. As we announced earlier this morning, Garmin delivered strong revenue and margin performance, resulting in pro forma EPS growth of 56% in the second quarter. Consolidated revenues increased 7% year-over-year to $718 million with growth in Outdoor outpacing all of the segments at 24%. Our traditional markets of Aviation, Marine, Outdoor and Fitness contributed 45% of the total revenue mix. Gross margins improved to 59% from 48% in the prior year. Kevin will discuss specific items impacting margin performance later during his remarks. Operating margins also improved significantly to 28%, with our traditional markets posting 10% operating income growth in the quarter. Revenue growth combined with improved margins resulted in both operating income and pro forma EPS growth. Operating income for the quarter grew 55% to $204 million, while pro forma EPS was $0.98, a 56% improvement over the prior year. We sold 3.9 million units in the quarter, up 4% year-over-year. Next I'll walk you through the financial and strategic highlights segment by segment. Starting first with Marine. Revenue in the Marine segment declined 14%, driven by weak economic conditions around the world. However, better gross margins largely offset the impact of lower sales. Sales in Europe were down sharply, while sales in other regions were comparatively better but still soft during the normally robust second quarter selling season. While industry statistics indicating that boating sales have improved, the trend seems to be towards low-end boats where there's little to no Marine Electronics content. We maintain a high level of confidence in our long-term opportunities in the Marine segment and are continuing to invest in new product development and strategic alliances that position us for market share gains. As we have mentioned previously, these investments will create near-term operating margin compressions. In Aviation, we posted revenue growth of 4% as improvements in OEM deliveries were partially offset by weakness in the aftermarket. In recent quarters, operating margin has trended below historical norms as new programs require a higher level of R&D investment compared to what we have seen in the past. We remain confident that these investments will lead to stronger revenue and operating margin growth for the future. During the quarter, we made additional announcements that demonstrate the progress we are making to expand our presence in the business jet market. Cessna selected are G5000 integrated flight deck for the new Citation Longitude, which is the longest range business jet operating, offering in the Cessna lineup. This expands upon the already successful relationship we have had with Cessna for many years now. In addition, we announced a new relationship with Bombardier who selected the G5000 for the new Learjet 70 and 75, which are scheduled for delivery in 2013. Due to the steady increasing number of new cockpit certifications that are in progress, we thought it would be helpful to provide a summary of the major wins that have been announced so far and projected entry into service based on publicly available information from the aircraft manufacturers. In 2013, we anticipate entry into service of the Citation M2 with the G3000 integrated cockpit system. The Citation Ten with the G5000 integrated cockpit system and the Learjet 70 and 75 also with the G5000 system. In 2015, we anticipate entry into service for the Citation Latitude, which will be equipped with the G5000 system. And finally, in 2017, we anticipate entry into service with the Citation Longitude, which will be equipped with the G5000 system. We expect these wins along with other initiatives to deliver revenue growth in Aviation that outpaces that of the overall industry. Turning next to Outdoor. The Outdoor segment continued to perform well in the quarter with 24% revenue growth and 23% operating income growth, driven by new products and category expansion. In the golf market, we are experiencing growth across our product offerings with our high-end wristwatch, the Approach S3, and our newest handheld, the Approach G6, both contributing to the strong results. In early July, we introduced yet another innovative product in the Outdoor category, which is the fenix. This rugged yet stylish wristwatch integrates best-in-class outdoor watch functionality with GPS navigation. In addition to the GPS functionality, which we are known for, the built-in sensors include an altimeter for elevation, a barometer for providing weather information and a compass for navigation and tracking. The watch can also be paired with additional sensors to provide temperature, heart rate and cadence. We believe this is a highly attractive offering at a value price of $400. Looking next at the Fitness segment. Revenue grew 5%, while operating income grew 35% on a year-over-year basis. The slower revenue growth but strong margin performance are attributable to a variety -- variability in our product cycle during the past year. In 2011, we delivered the Forerunner 610, which positively impacted revenue through channel fill, while discounts on the end-of-life Forerunner 305 drove additional volumes, but that negatively impacted margins. So far in 2012, there have been no major product announcements. However, we have experienced good demand for our high-end products including the Forerunner 910XT, the Forerunner 610 and the Edge 500. We anticipate revenue growth rates will improve later this year as we launch new products in time for the holiday season. Late in the quarter, we launched the Garmin Swim, our first fitness product that targets the swimming market. This training watch tracks stroke type, stroke count, distance, pace and lengths. This information can be uploaded to Garmin Connect for post-workout analysis. Garmin Swim was introduced at the U.S. Masters Summer Swimming Championships where it was well received by the swimming community, including both former Olympians and Olympic hopefuls. Our Automotive/Mobile segment experienced another strong quarter with revenue growth of 8% along with strong margins. Our strong margin performance was partially due to a onetime benefit of $21 million due to an overpayment of certain royalties. Kevin will provide additional details in a moment. We gained additional market share in the second quarter and now estimate that our market share in North America exceeds 70% with European market share of approximately 35%. While we have posted 3 consecutive quarters of revenue growth in the segment, we continue to expect that the overall PND market will decline approximately 10% to 15% in units and value for the year. This decline is consistent with our prior expectations for the market. During the quarter, we introduced an update to our zumo product family, which is designed specifically for the motorcycle market and represents an important customer base for us. We remain focused on OEM market opportunities and are excited to partner with Suzuki as they launch their 2013 models with the Garmin-branded entertainment system. Turning next to guidance. Having passed the halfway point for 2012, we are updating our full year guidance. In light of our solid first half performance, we are narrowing our revenue range to $2.75 billion to $2.8 billion, which is at the high end of prior guidance. Additionally, we have raised our margin expectations for both gross and operating margins. As a result, we are increasing our pro forma EPS guidance to a range of $2.70 to $2.85, an increase of approximately 10%. That concludes my remarks. Next, Kevin will walk you through additional details on our financial results. Kevin? Kevin S. Rauckman: Thanks, Cliff. Good morning, everyone. I'd like to begin by reviewing our income statement and margin results, then move to the balance sheet and cash flow statement and conclude with a few comments regarding our full year 2012 expectations. You saw that we posted revenue of $718 million for the quarter with pro forma net income of $193 million. Our pro forma EPS was $0.98 per share, which excludes the foreign currency loss. Our revenue represents an increase of 7% year-over-year. Gross margin came in at 59%, which was an 1,100-basis point improvement from the prior year. I will discuss this in further detail by segment a little bit later. Operating margin was 28%, up 890 basis points from the prior year. The components of this increase were gross margin being favorable by 1,100 basis points; offset by advertising, 20 basis points unfavorable, which was up $4 million on a year-over-year basis; SG&A, 110 basis points unfavorable, up $13 million on a year-over-year basis; our R&D was 70 points -- 70 basis points unfavorable, up $9 million on a year-over-year basis. Each of these expense categories will be discussed further on a later slide. Our pro forma EPS of $0.98 represents a 56% increase year-over-year, driven by increasing revenues, good gross and operating margins. Units shipped increased 4% year-over-year as 3.9 million units were delivered during the quarter. And our total company average selling price was $184 per unit, up 3% from Q2 of 2011. According to U.S. GAAP, we must defer revenue on certain products, and this table summarizes the net impact of the deferral and amortization of revenue and related costs in the second quarter of 2012 and 2011. In the current quarter, we deferred on a net basis approximately $16 million of revenues, resulting in a $0.05 of tax affected deferred earnings per share during the quarter. In the second quarter of 2011, we deferred net revenue of $62 million or $0.23 of tax affected EPS. While we are deferring revenue according to U.S. GAAP, we are collecting the cash at time of sale as reflected in the statement of cash flows. We expect to have a negative revenue and EPS impact due to deferrals in the upcoming quarters, but do not expect the impact to be as significant as the amounts that we deferred in 2011. As I said, in total, our revenues increased 7% during the second quarter, and with all segments -- within all segments excluding Marine contributing to the growth. During the second quarter, we generated an 8% revenue increase within the Auto/Mobile segment as volumes increased due to our 2011 acquisition of Navigon. We continue to gain market share and we benefited from a reduction in deferred revenue. Our Outdoor segment posted the strongest revenue growth at 24% due primarily to market share gains within the GPS-enabled golf market, strong consumer reception for our recent product refreshes and the acquisition of Tri-Tronics in the back half of 2011. The Fitness segment continued to grow with a 5% revenue increase when compared to Q2 of 2011. The slower growth resulted from an exceptional Q2 2011 when we were heavily promoting the Forerunner 305 and has just begun deliveries of the Forerunner 610. We will have new Fitness products at the back half of 2012. Aviation segment revenues increased 4% compared to Q2 of 2011 with growth in OEM, partially offset by a slowdown in the aftermarket. And finally, Marine segment revenues decreased 14% compared to Q2 last year as both the aftermarket and OEM markets slowed down due to a global decline in the Marine Electronics markets. During Q2, both the Americas and EMEA posted revenue growth with a slight decline in APAC. The decline in APAC is the result of a change in shipment location for a major OEM customer. Without the impact of this change, our APAC region would have grown approximately 10%. For Q2 of this year, the Americas represent 55% of revenue compared to 53% in Q2 of 2011. EMEA decreased from 38% of total in Q2 to 38%, while Asia decreased from 9% to 8% in the same period. The Auto/Mobile segment represented 55% of our total revenue during Q2, up slightly from 53% in Q2 2011 due to the contribution from our acquisition of Navigon. Outdoor grew to 14% of revenues in the quarter, an increase from 12% in 2011. And due to the improved profitability of Auto/Mobile in the second quarter, the operating income contribution of the segment increased to 43% from only 19% in the prior year. In absolute dollars, our traditional segments of Aviation, Marine, Outdoor and Fitness contributed $117 million of operating income in the quarter, a 10% increase over the second quarter of 2011. Moving next to the margin analysis. Our second quarter Auto/Mobile gross margin and operating margin were 51% and 22%, respectively. The year-over-year improvement in gross margin was primarily driven by the amortization of previously deferred high-margin revenue, which contributed 590 basis points, a onetime royalty fee adjustment of $21 million contributing 510 basis points and product mix shifting toward more full-featured large screen devices. Operating margin improvement resulted from the strong gross margins with only a slight offset in SG&A expenses due to a legal settlement during the period. Q2 Outdoor gross margin was 67%, up from 65% year-ago quarter. Operating margin was 44%, flat to the year-ago quarter as improved gross margins were offset by a slight increase in operating expenses. Q2 Fitness gross margin of 69%, up from 58% in the year-ago quarter when we were heavily discounting the Forerunner 305 product. Operating margin was 42%, again up significantly from the year-ago quarter as improved gross margins were only slightly offset by increased advertising costs in the segment. Q2 Marine gross margin was 64% compared to 56% a year ago as product mix shifted towards higher-margin products. Operating margin was 27%, down from 30% a year ago as the gross margin improvement was offset by increased R&D expenses to support our long-term Marine OEM strategy and cooperative advertising with our Marine partners. Our second quarter Aviation gross margin was 71%, up from 69% in Q2 2011. Operating margin was 27% for the quarter, down from 30% in the prior year due primarily to increased R&D expense associated with new OEM programs that will begin to contribute to revenue in 2013 and increased SG&A cost due to a bad debt credit that we booked in Q2 of last year. Our second quarter operating expenses increased by $27 million on a year-over-year basis from $191 million in Q2 2011 to $218 million in Q2 2012 and increased 200 basis points as a percentage of sales. R&D increased $9 million year-over-year in the second quarter and 70 basis points to 11% of sales as headcount increased with our recent acquisitions, and we continue to invest in OEM opportunities. Our ad spending increased $4 million over the year-ago quarter and increased 20 basis points as a percentage of sales to 5% in Q2 of 2012. This was largely driven by additional costs associated with acquired entities and cooperative advertising and promotional activities in our Outdoor, Fitness and Marine segments. And SG&A increased $13 million compared to the year-ago quarter, which was a 110-basis point increase to 14% of sales. The increase is primarily attributable to acquisitions and a $9 million legal settlement. Moving next to the balance sheet. We ended the quarter with cash and marketable securities of over $2.6 billion. Our accounts receivable increased sequentially to $486 million due to seasonal strength in the second quarter. Accounts receivable accounted for approximately 62 days of sales when calculated on a trailing 4 quarters compared to 66 days of sales in the second quarter last year. Our inventory balance has decreased to $384 million on a sequential basis at the close of the second quarter, and our days of inventory metric was 98 days compared to 106 days in the second quarter of 2011. The dividend payable now reflects 3 remaining quarterly payments of $0.45 per share, which was approved by our shareholders on June 1 at the Annual Meeting. We continue to generate significant free cash flow across our business as cash from operations was $223 million during the second quarter. CapEx was $12 million during Q2. Therefore, we generated free cash flow of $211 million during the quarter. Cash flow invested during Q2 was $146 million, which was including $12 million in CapEx and $132 million net purchase of marketable securities. Financing activities were $86 million use of cash during Q2 due primarily to the dividend payment on June 29, and we earned an average of 1.3% on all cash and marketable security balances during the second quarter. With our strong free cash flow generation year-to-date, we are making good progress to our forecast of $650 million, which will fund our annualized dividend of $1.80 per share or approximately $350 million. We also continue to pursue acquisitions in adjacent niche markets and tuck-in technologies, which fit with our core markets. As has been Garmin's practice, acquisitions will continue to be evaluated by technology, value, compatibility and strategic fit. Our tax rate for Q1 -- Q2 was at 10.4% due to the release of reserves following the expiration of the statute of limitations. We expect the full year 2012 tax rate to be approximately 13%. Finally, as Cliff mentioned, we are updating our full year 2012 guidance given current trends across our segments. Let's review the total company guidance, so here we just provide additional detail on revenue by segment. At a high level, we have increased our growth expectations for Auto/Mobile and Outdoor, our 2 largest segments, while Fitness and Marine expectations have been reduced. The upside in Auto/Mobile is the result of better-than-expected market share gains and product mix. Deferred revenue has also proven to be less of a headwind than expected. Outdoor revenue guidance is being raised due to the continued strength we are achieving in golf and dog-related products. Offsetting these positives, we reduced our Fitness forecast due to new product delays and our Marine forecast due to a weak Marine environment, which we view as a macroeconomic problem. While on the surface, this revised guidance may appear conservative given our strong first half performance, we do have a number of contributing factors to consider. First, first half revenue growth was positively impacted by our acquisitions of Navigon and Tri-Tronics, which were completed in the third quarter of 2011. Our Outdoor segment had very strong fourth quarter 2011 due to new product introduction and a strong holiday season for our golf devices. Also, the European macroeconomic situation and subsequent weakening of the euro brings possible headwinds for us in the back half of the year. This concludes our formal remarks this morning. We will now move to a period of questions.

[Operator Instructions] Our first question today comes from Mark Sue of RBC Capital Markets. Mark Sue - RBC Capital Markets, LLC, Research Division: If I could ask on PND, the units actually grew for the past 3 quarters, yet you're still pointing to a sharp decrease this year. I'm just wondering what's behind the fear that the segment deteriorates when the results indicate otherwise? Is it mostly the European macro? Is it competition or is it channel inventory? And also if you could comment on what's the impact of Apple maps, if any. Clifton A. Pemble: Yes, Mark, this is Cliff. There's really a couple of factors that impact our PND deliveries. First of all, we're delivering units under the Navigon brand, which has increased our deliveries. And along with that, we have market share gains, both when considering the Navigon brand, as well as organically in the Garmin brand. So we've been able to essentially avoid the trends in the market, which is a clear downsizing of the market that's going on right now. So as we comp against Navigon in the third and fourth quarter, we would expect our unit deliveries to level out and follow the market after that. And the market trend, again, is down 10% to 15% or so this year we estimate. As far as Apple goes, of course, everyone knows about the announcement that was made, turn-by-turn navigation on the next version of the OS. I would say that we've been through this before on the Android side of things, and Android does offer that on all their devices right now, so we don't see that as being a big change in terms of customers' perceptions. It just means that there's a choice now on the Apple platform that people didn't have before. Mark Sue - RBC Capital Markets, LLC, Research Division: Got it. And maybe a question for you, Kevin. The encouraging trends in the gross margin seem to imply a higher level of movement in operating margins, yet it's just a notch higher at this point. Is that mostly due to the drag on the Aviation side or is there something else going on where the flow-through from gross margins is not hitting operating margins just yet? Kevin S. Rauckman: Well, I think, you have to look at the seasonality that we experienced in margin. So while we did have a really strong quarter in the first half on gross margins, we still expect promotional activity during the holiday season, which will drive a little bit of gross margin decline in our Auto/Mobile segment. And then on the operating level, I think there is definitely a continued investment in those areas especially in the OEM side that Cliff and I both discussed. So it's a combination of the seasonality of gross margin but also the continued investment on OpEx. Mark Sue - RBC Capital Markets, LLC, Research Division: Just a quick follow-up. Is there a period where that peaks the investments on the OEM side and just for Auto and for Aviation perhaps? Kevin S. Rauckman: I think we've been investing pretty heavily on the Auto OEM and the Aviation and the Marine OEMs. So there's no peak. We're just going to continue to invest on these programs for future revenue growth.

We'll take our next question from John Bright of Avondale Partners. John F. Bright - Avondale Partners, LLC, Research Division: How significant was the contribution of Navigon to Auto/Mobile in Q2? Kevin S. Rauckman: So we're not really commenting on the amount that -- I think we did continue to perform well. Now we're into a period of transitioning to one brand in the back half, but that business and that acquisition has been very suitable to us not only from a revenue perspective, but also from capability on the R&D side. John F. Bright - Avondale Partners, LLC, Research Division: What is your view on the inflection point of PND sales versus embedded car navigation? When might we -- when do you think we're going to see that? Clifton A. Pemble: I think there's no question, John, that in-dash systems are increasing. It is still true that a lot of those systems are sold with more expensive cars or higher-end trends, and so the amount of penetration there has some upper bound at least at the moment. But right now, we still see that there's a healthy demand from people with vehicles without turn-by-turn navigation, as well as replacement buyers. John F. Bright - Avondale Partners, LLC, Research Division: And moving to Aviation, you have a timeline in your slide. How do you anticipate the ASP margin impact of OEM Aviation wins as we look forward to calendar '13 and forward? Clifton A. Pemble: ASP is kind of a hard metric for Aviation because systems like the G5000 come with many components in the overall system, and price per aircraft, of course, is high compared to other areas of our business. In terms of margin, we feel like that will be equivalent margin to what we've been experiencing so far, and there really shouldn't be any change in the overall gross margin profile. John F. Bright - Avondale Partners, LLC, Research Division: And to guidance, it looks like the -- you've trimmed your guidance in Fitness, Marine and Outdoor. Is it fair to assume that's primarily due to really economic concern? Kevin S. Rauckman: Well, first of all, we actually raised our guidance on Outdoor because our prior expectations had been 5% to 10%, so we're raising that due to continued success on what I have mentioned, the golf and the dog-related products. But I think Fitness is -- and we talked about the fact that we have tough comps into Q2. We do expect with some new product releases in the back half for that to be better, but I think it's that and also Marine are definitely macro concerns. John F. Bright - Avondale Partners, LLC, Research Division: Pardon me for mentioning Outdoor on the trim. Kevin and Cliff, on the Auto/Mobile side, more on the OEM side, characterize your progress in generating some additional wins. We've certainly seen some from TomTom. Characterize how you're -- how that's going for you. Clifton A. Pemble: Well, we think it's going steadily. I think this market does move at a fairly slow pace and the projects do take some time to develop and the relationships. So we don't want to provide people a false sense that this is going to move very quickly. The Auto industry is a slow-moving industry. With that said, we're excited about where we're at with the Suzuki program launches now, and it's a full infotainment system for the vehicle, which is a Tier 1 opportunity for us, which we're excited about. And other recent wins such as VW with the Navigon brand on the Up vehicle has been very good. John F. Bright - Avondale Partners, LLC, Research Division: Final question on the use of cash, on your slides, increased focus on acquisitions. Is there any change in that thought process from last quarter? Kevin S. Rauckman: No. We've continued down the same strategic path there. We're looking for companies that would fit us well, but can also provide growth much like you've seen from us in the past. So no real change in our strategy.

We'll take our next question from Yair Reiner of Oppenheimer & Co. Yair Reiner - Oppenheimer & Co. Inc., Research Division: I'm trying to understand the comment about PND volumes being up. Your revenue was up $30 million in the quarter, but $45 million of that came from the deferrals coming down. I think another $21 million came from the royalty reversal. So if I exclude those factors, it looks like revenue is probably down $20 million or $30 million. Is the right analysis here is that there was ASP coming down potentially because of the Navigon acquisition or what are the other factors at play here? Kevin S. Rauckman: Well, first of all, the $21 million adjustment is actually a gross margin benefit, so it's not a sales impact, but your other comments about Navigon and deferred revenue definitely hold true. So we did see with -- if you strip out deferred revenue, we did see just a small ASP decline as we move towards a little bit lower sales of lower-priced SKUs. That definitely exceeded expectations on the first half, but I think we're being pragmatic as we look at the back half of the year on unit growth, and we picked up market share gains pretty healthy in North America on the first half, but we don't forecast we're going to continue to grow any further on share gains in the second half. Yair Reiner - Oppenheimer & Co. Inc., Research Division: Okay. And then, if I look at the underlying margin, even if I exclude that $21 million, it's up in the high 40s. I think your guidance implies that the margin in the PND business goes back into the low 30s. I understand that there's typically promotional activity in the back half, but it seems like a pretty dramatic decline given the expectation that ASPs are going to stay relatively flat. Kevin S. Rauckman: I don't think our expectation is, again, in the low 30s, but they definitely come down as we see every Q4 into the -- below 40%. So there is some decline is assumed -- in our EPS assumptions in the back half, but not as low as you just stated. Yair Reiner - Oppenheimer & Co. Inc., Research Division: I meant high 30s, I apologize. Kevin S. Rauckman: Okay.

And our next question comes from Scott Sutherland of Wedbush Securities. Scott P. Sutherland - Wedbush Securities Inc., Research Division: So you talked briefly about some of the Auto OEM wins, BMW with Navigon and the Suzuki. Can you talk a bit more about the pipeline? Could we expect to see you guys is other 2013 models or is that longer term as you look at this market? Clifton A. Pemble: Well, the Suzuki win is 2013 models, and those are coming down the line now. Scott P. Sutherland - Wedbush Securities Inc., Research Division: I guess I was asking about the pipeline. Can we expect more Auto OEM wins for 2013 models beyond the couple you just announced or have been talking about? Clifton A. Pemble: Well, there's definitely other projects we're working on and I really can't comment on the timeline of those. But as I mentioned, the timeline for these programs is very long. So I would expect patience is in order in terms of just seeing some of these come to fruition. Scott P. Sutherland - Wedbush Securities Inc., Research Division: Diving deeper on an Apple question earlier, they did announce their maps navigation, but one of the things they did also announce is a button on the steering wheel integration with Auto OEMs. Has that changed any of your discussions you had with the auto manufacturers? Clifton A. Pemble: I think auto manufacturers are interested in incorporating consumer content into the cars. That's been true for a while now, and this is really just a variation on the capabilities that cars have had for a while, which is what we call the push-to-talk capability, activating voice recognition. Scott P. Sutherland - Wedbush Securities Inc., Research Division: Okay. And lastly, shifting over to the Fitness segment. How much of the decline in your guidance is due to the delay, such as the power meter and other things such as that? Are you seeing any competitive threats or is this just push out to 2013? Kevin S. Rauckman: I think it's both. I think the Vector product definitely was the one product delay that we assumed earlier in our guidance, so that's one component. But it's also a factor that there is more competition, and we do have some new products that I mentioned. We can't talk specifically about them yet, but if they are received well, we feel confident in that segment. But it's a combination of both product timing and also competition.

We'll go next to Charlie Anderson of Dougherty & Company. Charles L. Anderson - Dougherty & Company LLC, Research Division: Just to hone in on Fitness a little bit. I think you guys were looking at a little bit of an accelerating growth rate versus Q2 in the second half. You talked about new products. I wonder -- and you're sort of in the core markets of cycling, running and now swimming, and I wonder if you're adding new adjacent categories or you're just having refreshes of your current categories to get that higher growth rate? And then secondly, on Outdoor, it looks like you're implying kind of a slower growth rate on the second half versus what you did the first half, and I wonder with the fenix and golf having more points of distribution, why would we see that slowdown? Kevin S. Rauckman: Yes. I think, on the Fitness, definitely, we have niches of existing segments and categories. We're not looking at any brand new. We brought up the Swim watch as you mentioned, and then it's primarily in the running market. We already have the cycling products out for the year. So there's no new brand new categories that we have coming up other than some new features and functionality. From the Outdoors, I mentioned we have some very significant Q4 results last year. So we're really talking about a tough comp year-over-year, but with the new fenix watch, we think that's going to do well, and the remaining golf products and the dog-related products. So I think we're being reasonable on our expectations on Outdoor in the back half of the year. Charles L. Anderson - Dougherty & Company LLC, Research Division: Great. And then lastly on gross margins, it felt like it wasn't category specific the lift in every single category. I wonder if there was a common component that came in a little bit lower in terms of the pricing that you got or if there was some sort of a currency tailwind you got on your cost of goods sold? Kevin S. Rauckman: No, not really. I mean, we've seen single-digit product cost benefits across our business, but I think a lot of it had to do with the product mix as we talked about. We think that 5 points of margin is due to the fact that we sold products at higher functionality and higher price points, which helped our overall gross margins across many of the segments.

[Operator Instructions] And we'll go next to Simona Jankowski of Goldman Sachs. Simona Jankowski - Goldman Sachs Group Inc., Research Division: Just one more, a follow-up on the Fitness side. You talked about some of the competitive dynamics and the delays that might have impacted the revenue deceleration there. But margins are very, very strong, and also when we have tracked your pricing, it seems to be still pretty stable especially relative to what we've seen from some of the competition. And so, I guess, the question is what is your thinking around being more aggressive on pricing to stimulate some of the demand and also to fight off some of the competitive dynamics? Clifton A. Pemble: Well, I think, Simona, as we mentioned in 2011, we had a lot of promotional activities with products that was nearing the end of their life cycle. And I think you can expect that going forward, we'll have those kinds of activities as well, which will bring the pricing down and also bring the value up for people that are looking for certain capabilities in their running and cycling products. We're also planning to introduce new products, which will address additional price points in our range. Simona Jankowski - Goldman Sachs Group Inc., Research Division: Got it. And then just a clarification on your updated full year guidance, that includes the royalty benefit in it, is that right? Clifton A. Pemble: Yes. Kevin S. Rauckman: Yes, absolutely. Simona Jankowski - Goldman Sachs Group Inc., Research Division: Okay. And can you just expand a little bit on what the royalty entailed? What that reversal was all about? Kevin S. Rauckman: I think it was one of our suppliers that we typically review the price or the cost per unit. And so we made some adjustments there after doing further review, and I think that's the onetime benefit that we expect in Q2. So we don't expect that that's going to be anything significant moving forward, but it was a kind of a cleanup or a correction of past license fees paid.

We'll go next to James Faucette of Pacific Crest. James E. Faucette - Pacific Crest Securities, Inc., Research Division: Just a couple of follow-up questions. I think, first, as it relates to the Marine segment and addressing why gross margins were so strong there in spite of the year-over-year revenue decline. You mentioned product mix. Can you give a little more detail what is happening with the product mix there that's helping you to drive the better margins? Clifton A. Pemble: I think it's people gravitating towards the higher end of our product range, our bigger displays, as well as our more capable sounders which go on larger vessels. James E. Faucette - Pacific Crest Securities, Inc., Research Division: Okay. Great. And then you also highlighted the opportunities in Aviation, particularly as new aircraft start to ship in the next few years. What's your visibility into the unit numbers of their shipments? What kind of lead time do you get and how much confidence do you tend to have in those orders once they're delivered to you? Clifton A. Pemble: I think aircraft OEMs are running a long lead business much like a carmaker would do, but they have to plan their production months or even more than a year in advance. And so they provide us with forecast, and those are usually pretty solid. Obviously, when there's a major disruption in the economy like what we experienced back in 2008, things can dramatically change. But we feel like, for what we know today, there should not be anything that would significantly change the projections they're giving us. James E. Faucette - Pacific Crest Securities, Inc., Research Division: Great. And then my last question is just as it relates to investments that are ongoing, particularly in terms of trying to win OEM opportunities, how do you think about the, I guess that investment trajectory going forward? You've had a few wins, but at what point do you start to feel like, okay, most of the opportunities have now been allocated whether to Garmin or to others and can start to think about either scaling that back or not -- or just investing as revenues? Clifton A. Pemble: I think there's a certain amount of activity that we can support given the size of the overall automotive industry and the number of competitors that are out there. But right now, certainly, automakers are looking for new solutions and innovators that can come in and provide unique advantages and differentiators for their products. But this is a business that has a large number of participants, and the overall operating margin profile of people in the industry, if you gotten a look, is on the lower side. But it's also a business that gets refreshed every few years. Automakers don't just choose the supplier and then keep that for the next 20 years. They're constantly looking for new things. So we think that there's a sustainable business there that requires investment to get there.

And we'll take a follow-up from Yair Reiner of Oppenheimer & Co. Yair Reiner - Oppenheimer & Co. Inc., Research Division: Question about the take rate for lifetime mapping. Can you tell us how that's tracking and what you expect for the back half of the year? Kevin S. Rauckman: Yes. We did see continued increases in that, primarily in the European market. So we're about 2/3 of our PNDs are now bundled with lifetime map. So we expect that to continue to increase probably to about 3/4 of our units by the end of the year. Yair Reiner - Oppenheimer & Co. Inc., Research Division: Great. And then it looks like you have some litigation stuff behind you. How should we think about SG&A for the balance of the year? Kevin S. Rauckman: I would think that SG&A, we did have the onetime $9 million. SG&A should stay at the current run rate where we might actually see a little bit of savings in Q3, but it will be between the 13% and 14% of sales for the full year.

And we'll go next to Jonathan Goldberg of Deutsche Bank. Jonathan Goldberg - Deutsche Bank AG, Research Division: A couple of quick questions here. Just, first of all, on the power meter on your Vector product, can you give us an update on where that stands? Clifton A. Pemble: Yes, as we have told you before, we have been extensively testing working prototypes that we've been building. And at the time, we weren't happy with the consistency and the overall performance that we were seeing. So we are doing some design changes and starting to assemble new prototypes now, and we would expect that by the end of the year we should have a solid power meter. Jonathan Goldberg - Deutsche Bank AG, Research Division: And what is the -- what caused the problem there? Is it a function of this being a more mechanical rather than electrical product? Clifton A. Pemble: Well, it's some of that, but it's a highly sensitive measuring instrument, and so integrating that into the bike and achieving some of the innovations that we're working on here has been challenging, but something that we're able to knock off the problems one by one. Jonathan Goldberg - Deutsche Bank AG, Research Division: Okay. And then just shifting over to Marine real quick. This is typically a market where you guys have been somewhat subscale, or not subscale but sort of a lot smaller than some of your bigger competitors. Do you see a potential to shift your market position there over time without acquisitions? Can you guys grow without, say, acquiring Raymarine, which got away? Clifton A. Pemble: Yes. Actually, we estimate our market position right now to be a strong #2 in the market, and we're actually the strongest one single brand out there in the market. We've been able to raise our penetration into the market through our large displays and through additional systems that we brought to market such as our radars and our sounders, which are built for the big boaters and the coastal markets. So we're very strong, we feel, in the coastal markets, and we're less penetrated in some of the other markets such as inland and sailing.

We'll go next to Rich Valera of Needham & Company. Richard Valera - Needham & Company, LLC, Research Division: Kevin, a clarification on your commentary on SG&A. When you said a slight savings in 3Q, were you referring to the $99 million or backing out that $9 million settlement charge? Kevin S. Rauckman: I was referring to the $99 million. So yes, we would still see a slight growth if you strip out the legal fees for the rest of the year, but still, I guess, between 13% and 14% total year SG&A as a percent of sales.

We'll go next to Michael Holt of Morningstar. Michael Holt - Morningstar Inc., Research Division: Looking longer term at the Fitness segment. Just wondering if you could provide some color on the dynamics that you think will help you maintain your lead over the competition. Is it the fragmentation of the market, the distribution advantages, the ability to invest more in innovation? Or how do think about staying ahead of the competition? Clifton A. Pemble: Well, I think, we've established a really strong presence in the market especially amongst the really serious participants in that market, and so we're experiencing a lot of loyalty from those customers built on the kind of products that we're doing. They're very innovative, they offer the kind of features that the customers want and they trust our products and our brands for what they're doing.

And with no further questions in queue, I'd like to turn the conference back over to Kevin Rauckman for any additional or closing remarks. Kevin S. Rauckman: Well, thanks, everyone, for your participation, and we look forward to staying in touch and further comments as we execute in the business throughout the second half of the year. So thanks again, and have a great weekend.

This does conclude today's conference. We appreciate everyone's participation today.