Kerri Thurston – Director-Investor Relations Cliff Pemble – President and Chief Executive Officer Doug Boessen – Chief Financial Officer and Treasurer

James Faucette – Morgan Stanley Simona Jankowski – Goldman Sachs Mark Sue – RBC Jeremy David – Citigroup Charlie Anderson – Dougherty & Company Tavis McCourt – Raymond James Ben Bollin – Cleveland Research Will Power – Robert W. Baird Brad Erickson – Pacific Crest Securities Kristine Liwag – Bank of America Merrill Lynch Rich Valera – Needham & Company

Good day, ladies and gentlemen, and welcome to the Garmin LTD Third Quarter 2015 Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, today’s program maybe recorded. I would now like to introduce your host for today’s program, Kerri Thurston, Manager of Investor Relations. Please go ahead.

Good morning, we would like to welcome you to Garmin Limited’s third quarter 2015 earnings call. Please note that the earnings press release and related slides are available at Garmin’s Investor Relations site on the Internet at www.garmin.com/doc. An archive of the webcast and related transcripts will also be available on our website. This earnings call includes projections and other forward-looking statements regarding Garmin Limited and its business. Any statements regarding our future financial position, revenues, earnings, market shares, product introduction, future demand for our product 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 which is filed with Securities and Exchange Commission. Presenting on behalf of Garmin Limited this morning are Cliff Pemble, President and Chief Executive Officer; and Doug Boessen, Chief Financial Officer and Treasurer. At this time I would like to turn the call over to Cliff Pemble.

Thank you, Kerri, and good morning, everyone. As previously announced Garmin reported third-quarter revenue decreased 4% year-over-year. Aviation, fitness, marine and outdoor contributed 61% of total revenues and 75% of the operating profit in the third quarter. We continue to see our revenue base diversify broadly across our business segments. Gross margin was 53% and operating margin came in at 18.5%. Reduction in margins from the prior year reflects a combination of factors. Including downward pressure from unfavorable currency movements, a more competitive pricing environment, particularly in the fitness market and continued investments in advertising and R&D. These factors, combined with a higher effective tax rate, resulted in pro forma EPS of $0.51 in the quarter. Throughout the year we have highlighted that the strong U.S. Dollar related revenue has been in geographies of weaker currencies. In contrast, unit delivers were up 4% for the quarter and 10% for the year, due to the contribution from growth segments. While our primary yardstick is financial performance, we are encouraged by the underlying trends reflected in unit growth. Doug will discuss our financial results in greater detail in a few minutes, but first I’ll provide a few comments on each business segment. Beginning with the fitness segment, revenue grew 23% on a year-over-year basis with the sequential acceleration driven by strength in activity trackers, multisport, and cycling products. It’s interesting to note that current headwinds disproportionately impact the fitness segment due to the geographical revenue mix. These headwinds have softened revenue growth while unit deliveries have remained strong. We believe this indicates that the underlying business case remains sound Gross and operating margins were 54% and 19% respectively. Gross margin was impacted by unfavorable currency movements and competitive dynamics in the market. Operating margin was impacted by increased spending in R&D and global advertising. We believe these investments are strategically important in order to maximize the opportunity in this high growth segment. We’ve recently introduced a new family of Forerunner products which includes three models the Forerunner 230, Forerunner 235, and Forerunner 630. Notably, the Forerunner 235 is our first wearable to incorporate Garmin Elevate technology. Garmin Elevate is a wrist-based heart rate sensor we specifically developed to serve a broad range of used cases from all-day heart rate tracking to intense workouts. All of the new Forerunners are compatible with our Connect IQ application framework, enabling users to personalize their watches with a host of interesting watch faces, custom data fields, and useful applications developed by third parties. We also recently introduced an exciting new activity tracker called vívosmart HR, which also features Garmin Elevate technology for all-day heart rate tracking and activity intensity monitoring. Garmin Elevate technology combined with an always-on display and smart notifications, make the vívosmart HR one of the most capable activity trackers available on the market. To support these products and many others we have released a major update of Garmin Connect Mobile. This update features a completely new user interface making an easy to view important activity information at a glance and providing even more customizations to fit individual needs. All of these new products are shipping now and we will soon launch a major new advertising campaign to support sales during the upcoming holiday shopping season. Looking at outdoor revenue declined 5% year-over-year, as the revenue mix shifted to geographies with weaker currencies. Gross and operating margins were stable sequentially, but declined year-over-year driven primarily by currency weakness and product mix. The Fenix 3 has been an exciting success story this year. During the quarter we expanded the available choices for Fenix 3 with new color and material options and time for the holiday shopping season. Turning next aviation, revenue declined 5%, as the industry had been impacted by lower oil prices and stock market volatility. Gross and operating margins remained strong at 74% and 25% respectively, though operating margin declined on a year-over-year basis due to R&D growth supporting future revenue opportunities. While the industry slowdown is disappointing, we remain confident in our improving position in the business jet category and look forward to completing development and certification of additional aircraft platform, as previously announced. We remain confident in our market position and the opportunities for long-term growth. Looking at submarine, revenue was flat in the third quarter, as the boating season ended and we passed the first anniversary of the July 2014 acquisition of Fusion. Gross and operating margins improved as mix shifted to new products with higher margin profiles. Our investment and innovation has resulted in increased market share and industry-wide recognition. Garmin was recently honored as Manufacturer of the Year by the National Marine Electronics Association. We also won four product-specific awards in the autopilot multi-function display and smartphone applications categories. We intend to build on this momentum in the coming year with additional innovation and market share gains. In the auto segment, revenues were down 14% in the quarter, driven by the secular decline in PND market, as expected, however, our worldwide market share remains stable and strong. The PND market is an important part of our business and we remain focused on delivering a superior in-vehicle experience. Most recent example is babyCam, which was announced earlier this month. babyCam is a back seat monitoring system that streams wireless video to compatible Garmin PNDs. This system provides front seat passengers the ability to safely monitor the well-being of other passengers or cargo and appliance. As previously announced we’ve updated our full-year guidance and now anticipate revenues of approximately $2.8 billion, which includes approximately $185 million of negative currency impact, due to the stronger U.S. Dollar. Our revenue outlook has been adjusted in fitness, outdoor and aviation, which are the segments most impacted by the economic and competitive factors, mentioned previously. We expect gross margin to be approximately 53.5%, down slightly from previous guidance, due to unfavorable geographic revenue mix and competitive pricing dynamics in the fitness segment. Due to the revenue and gross margin revisions, we now expect operating margin to be approximately 18.4%. Finally, we anticipate pro forma EPS of approximately $2.25, which also reflects the higher anticipated tax rate for the full year. While it’s disappointing to revise to our guidance, we believe that the underlying business trends remain positive. And our investments in R&D and advertising will create long-term opportunities. That concludes my remarks. Next Doug will walk you through additional details on our financial results. Doug?

Thanks, Cliff. Good morning, everyone. I’d like to briefly review our financial results, then move to summary of comments on the balance sheet and cash flow statement. We posted revenue of $680 million for the quarter, pro forma net income of $97 million. Pro forma EPS was $0.51 per share. During the quarter, we faced significant exposure to foreign currency fluctuations, which resulted in a revenue headwind of $52 million or 7% of revenue. Gross margin declined to 53%, 310 basis point decrease from prior year. Operating margin was 18.5%, a 640 basis point decrease from the prior year. Finally, effective tax rate increased to 27.7% at current quarter, compared to a pro forma rate of 21% in the prior year. This created earnings pressure of $0.05 per share. We’ll discuss gross margin, operating expenses and effective tax rate in more detail later. Next, we will look at third quarter revenue by segment. The auto segment represented 39% of our total Q3 2015 revenue, compared to 44% in the third quarter 2014. We continue to diversify our revenue base, with fitness increasing to 21%, our total Q3 2015 revenue. Next I’d like to discuss gross margin. This decreased to 53.3%, driven largely by the currency headwind, which reduced revenue by $52 million on a constant currency basis. As well as pricing dynamics in the fitness segment. Total corporate operating margin was 18.5% due to gross margin pressure and increased R&D investment. Looking next at operating expenses. Third quarter operating expense increased by $14 million or 6%. This is a 330 basis point increase as a percent of sales. Research and development increased $7 million year-over-year, or 150 basis points to 15.6% of sales. We continue to invest in innovation, with increasing resources focused primarily on aviation, fitness, and outdoor, where we see long-term growth opportunities. Our advertising expense increased $4 million for the prior quarter, represented 5.4% of sales, a 70 basis point increase. Additional spending was focused on fitness with investments in media, point-of-sale presence with key retailers, and cooperative advertising. SG&A was up $3 million compared to the prior quarter, increasing 100 basis points as a percent of sales to 13.8%. Increased spending was driven primarily by IT expenses, product support costs, as our customer base continues to grow rapidly. Just a few quick highlights on the balance sheet and cash flow statement. We ended the quarter with cash and marketable securities of over $2.4 billion. Accounts receivable decreased both sequentially and year-over-year to $432 million. Our inventory balance increased to $5.3 million, prepared for the fourth quarter and launch of a number of new products simultaneously. During the third quarter of 2015, we generated free cash flow of $124 million. Also in the quarter, we paid dividends of $97 million, repurchased $51 million of company stock with $192 million remaining for purchase through December 2016. Finally, as I mentioned previously, effective tax rate increased to 27.7% in the current quarter, compared to a pro forma rate of 21% on third quarter of 2014. Increased tax rate was primarily result of forecasted income mix by tax jurisdiction which was negatively impacted by the overall reduction in forecasted taxable income, and the result in catch up expense for the first half of 2015. Our full-year effective tax rate is now expected to be approximately 21.5% due to the change in income mix by tax jurisdiction. Consistent with last year, the full year effective tax rate forecast assumes the passage of the R&D tax credit. This concludes our formal remarks. Johnson, can you please open the line for Q&-A?

Certainly. [Operator Instruction] Our first question comes from the line of James Faucette from Morgan Stanley. Your question, please? James, you might have your phone on mute.

Yes, can you hear me, now?

Yes.

Okay, thank you. I wanted to ask a couple of larger, bigger picture questions. As we go into the end of this year and we start to think about 2016, how are you thinking about the appropriate levels of investment into efforts like fitness bands, et cetera. Clearly that has – you haven’t done as well as you would have thought and you’re still hopeful there and looking to invest. But when do you think about starting to rationalize better or reevaluate that, first. And second I guess is more of a backwards-looking question, but as we’ve gone through this year we’ve seen you revise your expectations related to and the impact from exchange rates a few times, first it was just on the pure translation and then later it’s been on demand. How are you feeling about where we’re at from that perspective? And do you think that the lower levels of demand given the higher pricing the U.S. dollar persists into 2016 or do you need to make pricing adjustments to address that better going into next year? Thank you.

Yes thanks James. In terms of 2016 it’s certainly too early to comment but I would say that this fourth quarter is obviously very crucial in terms of gauging the overall market and we believe at this point we have a very strong product line that we’ll read a lot into our plans for 2016. So our approach would be to plan our 2016 based on of course how we view the market towards the end of this year. In terms of the revisions and kind of commenting on where we are at, I think, our situation with the currency is not so much an issue of lower demand or lower quantities, but it really is pressure on the revenue side and the translation of currency. We had some particularly strong results in some of those currency affected areas which is actually a good problem to have. But from the pricing point of view it’s very difficult to change the pricing in a short-term basis. So we’re doing what we can in the short-term to increase prices where we have some ability to do that, that’s a longer-term solution it’s really with products, new products and innovation.

Thank very much. And then just last follow-up question for me. Can you give an update on in-dash [ph] and specifically where we’re out with Honda, that seem to be a good opportunity for you. And what are you thinking about the roll out potential of pro [ph] with that partner?

Well, Honda is currently rolling out in North America now, so we’re on a quite few platforms there, including the Pilot, Civic, CR-V and the Accord. So we’re excited about what’s going on there and it is rolling out for plan.

Thank you. Our next question comes from the line of Simona Jankowski from Goldman Sachs, your question, please.

Hi, I just had a couple of question on fitness, as well. Can you help us understand the relative impact to pricing and margins from FX versus the competitive elements? And then, I was curious, if the products you just introduced, the Forerunner, the vívosmart, is that the line up for the holidays or are there others in the pipeline and are you looking at expanding into adjacent categories, as well? And then just lastly, any thought on hedging, I know you historically hadn’t, but just given the moves we’ve been seeing, is that something that you are now considering?

Yes, this Doug. I will talk about the breakout of the fitness gross margin, year-over-year decline, about 360 basis points of that decline year-over-year is due to FX, the remainder is due to the product mix change, as well as the competitive pricing dynamics. And as it relates to hedging, hedging is something where we’ve seen the fluctuations in the currency all through our corporate history book from a favorable, as well as unfavorable and we looked that in the past. Our current plans are not to hedge, since there has been large fluctuation of currency that is already taking place.

And in terms of the product line-up, Simona, we’re basically in place now with our fourth quarter holiday plans of all of the introductions that we had planned for the year, so 19% [ph].

And Clif, in addition to the holiday line-up, are you investing in adjacent categories. We know within fitness or outdoor, beyond the existing categories?

In terms of, what way?

Just new product categories, so other than say fitness, watches or outdoor devices. Are there any adjacencies that we may not be thinking of that on your internal roadmap?

Well, we always have things on our internal roadmap and we don’t share those publicly. Out one of the recent examples of course in the automotive area was babyCam and we intend to continue to see that across all of our segments.

Great, thank you.

Thank you.

Thank you. Our next question comes from the line of Mark Sue from RBC, your question, please.

Thank you, maybe just some further details on your competitive dynamics and pricing in fitness, well was it cutting prices and how does Garmin respond in a market, where price elasticity of demand is quite high. And you are also at the advantage of your prices being higher, because of FX. So maybe how we should think about how you stand the market share loss and also recall how you might reverse that. In fact everyone has new products, we’re just trying to get a sense of how you might be able to improve this metric? Thank you.

Well, I think a couple of things, Mark, in terms of the pricing, last year we were selling our basic entry-level tracker, the Vivofit at $129. And this year in terms of product lifecycle and overall market the situation has changed where that’s above sub-$99 or sometime even sub-$79 product. Of course, we have other products that are filled in towards the upper end, but the situation is just different this year than last year. In terms of FX we aren’t really at a pricing disadvantage because of FX. It doesn’t make our prices higher, but it makes it – the impact is on the revenue we recognize in U.S. dollars once the currencies are translated. So that’s really the factor. And then the other thing I would mention is that the overall fitness market also includes running and the running market dynamics have changed in the past year, due to the advent of the wrist-based heart rate being key features that customers want. And consequently our product line until we started introducing our products of Forerunner 225 and now Forerunner 235 have been little softer in the market because of absence of that feature.

That’s helpful. As it relates to your balance sheet, you have a very healthy balance sheet and your stock currencies actually quite depressed. If you look at next year and we look at all the positive trends that are going to happen, as it relates to, new products, new market entry. Any thoughts on doing a big ASR at this point, adding some debt to the balance sheet, so that you can – retire quite a bit of soft trade [ph] and make up for some of the EPS that we lost as we started the year?

At this point of time, you are right we do have a very strong balance sheet, as well as still have significant cash flow. But as we look at that our stock buyback situation will continue to monitor that depending upon the different conditions that are out there.

That’s helpful and thank you and good luck.

Thank you.

Thank you. Our next question comes from the line of Jeremy David from Citigroup. Your question, please?

Good morning. Thanks for taking my question. Congratulations on the introduction of your Elevate wrist-based heart rate monitoring technology. How accurate is that technology versus other wrist-based heart rate monitoring technology available in the market today if you could compare that? Maybe what is the difference versus other technologies. Maybe I want to do a clarify, when the new Forerunner 235 and the vívosmart HR when we’re expecting to see the ramp of these products, unlike it’s more in Q1 than Q4 based on accounting [ph] some of the lone grades you’ve used in the press release, you split that, I wanted to check that with you.

Yes in terms of the heart rate technology Jeremy, you know that we are a company that comes from the technical running side of things. So heart rate accuracy is very important to us. And other things that we did with our new technologies is ensure that it works very well for both the demanding athlete, as well as the less demanding requirements of all-day tracking. So we feel very good about the accuracy of our solution we feel like it’s very versatile and allows us to widely deploy it across our product line. In terms of ramp-up of the new products, these products as I mentioned in my comments, are available shipping now and they should be vívosmart HR should be available the November 1 at Best Buy and Forerunner 235 is also shipping now. So we think that they will have a meaningful impact on our Q4.

Okay that’s very helpful, thank you. If I can have a follow-up, you mentioned currency headwinds for several quarters now. However, does it look at you revenue breakdown by regions? All of the growth is coming from inside of the U.S. APAC is performing very strongly up double-digits year-over-year. But the U.S. revenue was down 10% year-over-year because there there’s no currency impact there. So first what are the drivers of growth in APAC and then why are sales in U.S. pretty week?

Well we’ve been doing very well in APAC in some countries like China and Taiwan particularly with wearables that’s a big growth area there. But one thing I would like to highlight is that, last year in Q3 the Americas region had its strongest performance of the year, up 12%. And so we are comping against little stronger performance in the Americas region, as well.

Great and then last question. If I look at your free cash flow for the year so far first three quarters of 2015. You spend more on the dividend, then you’ve generated free cash flow. How do – how should we think about dividend growth going forward and dividend sustainability? Thank you.

Well I think our cash flow situation of course has been impacted by all the factors that we mentioned, particularly the reduction in revenues due to currency, as well as the increased tax rate. So this is not the ideal situation that we would have planned and of course we plan for higher levels of cash flow generation in the future with new product introductions and as things normalized around the currency rates.

Okay thanks for answering my questions. Appreciate it.

Thanks.

Thank you. Our next question comes from the line of Charlie Anderson from Dougherty & Company, your question please.

Yes, thanks for taking my questions. I wonder if you could take a stab at how fitness grew on a constant currency basis in the quarter and then sort of that exit rate for the year, would be helpful. And then secondly, on fitness, you are spending more advertising I wonder if we should think about a certain number for, sort of a percent of sales as you go forward, if there is a change there versus the past, what that number might be?

Yes, in terms of the growth on a constant currency, we kind of headlined our overall situation on a consolidated basis so we haven’t been focusing on that on the individual segments. We feel like the situation is going to quickly clear as we exit the year because if you remember the currency took a major nosedive that the international currencies did around the first half of the year. So a lot has changed between then and now because we’re introducing new products, we’re adjusting pricing and so the comment on constant currency, things start to get a little bit intermingled and difficult to isolate. In terms of advertising, we are spending at a higher level strategically in fitness. And we will continue to do so in the future in order to take advantage of the opportunity. So I would expect that in the coming year that we would have an increased level of advertising over historical levels probably similar in terms of percentage of sales and as to where we are today.

Great, then my follow-up relates to aviation. It was a couple of year ago you guys won a number of new platforms, we haven’t seen a lot of new platforms been announced in the last couple of years. I wonder how that pipeline looks today as we close out the year we’ve got NBAA in a month or so.

Well, we still are working on some new platforms that haven’t air reached in the market. As you know the 100 Jet and Cirrus SF50. And so those have been programs that are still in the works and of course we are constantly working on new business, but at this time we don’t have anything to report.

Thanks so much.

All right. Thank you.

Thank you. Our next question comes from the line of Tavis McCourt from Raymond James.

Hey, guys. Thanks for taking my question. Quick, my product question is on the auto business and kind of the aftermarket, specifically. This year you’ve launched a lot of enhancements to kind of the classic PND line, whether that’s the babyCam or DashCam or some units with forward collision warning, lane departure warning and as more technology kind of gets baked into cars at the OEM level would seem to create an opportunity for aftermarket sales. What I’m getting at is, have you done any advertising around these new features or any sense of the demand levels for them yet? Is that part of the advertising increase in Q4, where the advertising increase corporate wide, really just focused on the fitness side of the business.

Well I think, specifically for auto we have done some appropriate level of advertising around some of these new features that you mentioned. But as you know the category has matured and has been in secular declines. So we’re judiciously investing there, based on the opportunity. In terms of where we’re focused strategically, the fitness market and to some extent outdoor categories are where we’re focusing our advertising spend.

Got you. And then Doug you mentioned specifically $52 million of FX headwind this quarter, although like you said, I suspect it’s kind of tough of nail down exactly, because of price changes and things like that. And then you mentioned, I think, $185 million on the year. What is that implied headwind in Q4 and I suspect in Q1 that gets pretty de minimis, but just wanted make sure that.

Yes, so basically, yes, we had $148 million year-to-date of headwinds. So $185 is the amount of difference from that standpoint. And as you move into Q1, as Cliff previously mentioned, some of the exchange rates hopefully will kind of be more level, year-over-year from that standpoint. But yes…

Yes.

We will have to see how the currencies, move over to next three months or so.

And from a cost perspective, there is a change in the Taiwanese dollar, the last couple of months, impact you guys positively or negatively?

Impacting us positively right now, as it’s been swinging weaker. So that’s reflected in our overall results.

Okay, thanks very much.

Thank you.

Thank you, our next question comes from the line of Ben Bollin from Cleveland Research, your question, please.

Good morning, thanks for taking my call.

Good morning.

First question I had for you is when you look at the sustainability of these investments you’re making, you commented advertising probably runs a little harder into next year. But when you look at R&D it’s increased in absolute terms, total dollars for the last several years and growing again, as a percentage of revenue this year. Should that pattern persist or how should we think about the R&D growth on a look-forward basis? And then I have a follow-up.

Well, certainly has increased in the past years and part of that is that the product lines have become more complicated than they used to be in the past. They used to be that we could tell a device that was engineered to kind of standalone unit. But today we not only have to do the device, but we also have to do the cloud and the mobile applications so the development has become more complicated and thus requires more investments just kind of the reality of the current state of the market. With that said, we do wish to leverage our R&D investments and overtime try to equalize out with the opportunity but it would definitely be at a higher level than what we’ve seen historically.

Okay, second part, lots of discussion about the emphasis and the push into the fitness business. And if you look at the margin performance in fitness, in the quarter it was essentially at the corporate operating margin level. Obviously there’s implicit makeshift towards the fitness wearables. But as you see a larger percentage of sales from fitness wearables and capabilities improve, the margins get better in that business or how should we think about the margin performance within fitness overtime?

Well, certainly, our goal is to try to bring it back towards where it was but I think, it is kind of the state of the new reality in the market. There is a lot of emphasis on the fitness, a lot of competition out there. And so I would not expect to be able to certainly, quickly or maybe even ever be able to get back to the very high levels that we had when the product mix was only specialty products.

Thank you.

All right. Thank you, Ben.

Thank you. Our next question comes from the line of Will Power from Robert W. Baird. Your question please.

Great, yes, thanks for taking the question. I guess a couple of questions. First maybe on the outdoor segment, I want the commentary you had, I think the release you alluded to growth opportunities in 2016. So I guess, I wondered if you could elaborate on that, what you think might help grow that category for you next year and I guess along those lines any updates perhaps on the golf market, camera market, et cetera.

Yes, in terms of outdoor the opportunity there is particularly in wearables and also dog products have been doing very well. And so again next year we would intend to leverage those categories to be able to sustain and possibly even grow the overall category of outdoor. In terms of cameras, we’ve just recently introduced the VIRB X and VIRB XE. And we’ve taken an approach there being more of a niche player particularly appealing to the other segment customers in our product line, particularly in marine and aviation. And we feel reasonably positive about how that’s been going as more of a niche category we’ve had a lot of good feedback from those markets. And it’s been getting specialty distribution that seems to be good.

Okay, and then the second question just coming back to aviation, it feels like visibility is limited and there have been some macro headwinds, I mean are there any green shoots on the horizon that you see at this point from a macro standpoint or I guess you referenced stock market and energy prices being a limiting factors. That continues to be that the principle headwind. And I guess along with that I guess I’m just curious how you kind of – how do you frame you energy market exposure how big of an issue is that?

Yes in terms of the macro side we don’t really see anything in the near-term that reverses that the trends, I think, aviation tends to be a long-term play. So as a result, as the macro conditions ebb and flow it tends to impact the market and the market reacts over a period of months or years. But in terms of the oil side of things the biggest impact for us has been on the helicopter side, particularly where the oil services companies and of course the providers of equipment to those and both the OEM and aftermarket has been challenged in that environment. And the other secondary factor is the oil producing countries the people there probably aren’t buying as many aircraft or retrofitting as many aircraft in that environment. But that will equalize overtime, oil prices tend to go up and down, so it’s not something we’re particularly worried about in the longer-term.

Okay. Thank you.

Thank you.

Thank you. Our next question comes in the line of Brad Erickson from Pacific Crest Securities, your question please.

Hi, thanks for taking my questions. Just following-up on fitness, I guess seems like your unit growth here in Europe has been obviously lot better than in the U.S. lately. Is that something you see continuing or will those growth rate sort – converge as we look out into 2016?

Well I think it’s probably hard to predict how the different markets perform. Europe and the international scene is probably a year or two behind in terms of the overall adoption of fitness and wellness based products. But they’re in a little more of a growth curve at this moment.

Got it. And then just on the aviation front, can you just talk about just briefly of the cadence of kind of new certifications you have coming out over the next year or year or two perhaps and how that compares to this past year or two?

Yes, I think, the past couple of years we’ve definitely seen a lot of new platforms, particularly in late 2013, 2014 and early 2015. We still have a couple of platforms that are publicly announced out there that are yet to be certified late this year, early next year. But in terms of the new business of course I can’t comment on those at this time.

Got it and then finally an apologize, I think, you may have already address this but I missed it. The operating results obviously leading to lower cash flows than we thought a few quarters ago. Can you kind a talk about how this might impact the dividend and just, I guess, more broadly how the boards thinks about changes to the dividend in light of weaker operation. Thank you.

So I think dividend is a high priority for us, particularly to be a reliable, long-term payer of dividend. So that’s really our number one priority in terms of our overall usage of free cash flow. For us, at higher levels of cash flow we also want to consider other investments like acquisitions and buybacks, but will tend to fill those in based on our available cash flow in order to make sure that we’re able to manage our cash appropriately.

Got it, that’s helpful. Thanks.

All right. Thank you.

Thank you. Our next question comes from the line of Ron Epstein of Bank of America Merrill Lynch. Your question please.

Hi, good morning everyone. This is actually Kristine Liwag calling in for Ron.

Hi, Christian.

When you think about the target customers for new products that you are rolling out in fitness for activity trackers and baby monitors, first as your traditional customers for high and niche fitness watches and power meters, how much do you think that overlap is between the two groups?

Between new customers and the existing customers?

I mean, buyers of newer products that seem to be a little bit more of targeted to mainstream versus your legacy portfolio that’s more of niche activity tracker for marathon trainers and things like that.

Yes, I think that’s a while running has traditionally been viewed as a niche, I think, there’s is definitely a social movement going on now with increased activity including running. So a lot of people are starting to be interested in it, and pick up on it and a lot of people that are coming to the market of course are people that have been exposed to Garmin in some way. So we feel like we do have broad brand recognition and the ability to serve those customers, as they get interested in it.

Sure, and also I understand that advertising dollars will pick up, I mean, you’ve mentioned that a few times. But then will you also have a shift in strategy, especially, as I mentioned, right here – it seems like you’re moving a little bit more towards the mainstream customer.

Well, I mean, we’re advertising those products where we see the biggest market opportunity and that’s particularly in areas of activity trackers, fitness, and some of our wearables and outdoor.

Sure. And last question from me. From my understanding, and please correct me if I’m wrong, aviation products are largely manufactured in Kansas, while a lot of your consumer electronic parts are really in Taiwan. If there is a strategic decision to unlock value and split up the company, how easy is that to do on an operation and manufacturing perspective? And then, a follow-up to that, would be, first how often do you and the Board discuss portfolio shaping?

Portfolio, shaping?

Yes.

Okay, understand. So I’ll address the first question you mentioned about unlocking value, that is something that not on our radar right now. We view our all of our segments, as strategic components of our overall portfolio and it’s something that we aren’t considering. In terms of portfolio shaping, I’m assumingly what you mean by that is a strategic direction of our product portfolio and that is something that we review, on a regular basis with our Board and it’s something that we review internally on a constant basis within our company, with each segment.

Okay, great, thank you.

Thank you.

Thank you, our next question comes from the line of Rich Valera, from Needham & Company, your question please.

Thank you. Cliff just in terms of your – you mentioned sort of a plan to improve the operations of the company relative to the recent poor results and it wasn’t clear to me if there was sort of anything new – any new elements to the plan. If you’ve made any sort of strategic decisions, as far as how you’re going to approach the market based on the recent downturn or is it kind of more of the keep investing in new products and new adjacencies and go after the markets, that way, I just wanted to know, if there’s anything new or different and maybe in the way you’re approaching the market, based on the recent results?

Yes I think the recent results are obviously challenging, because on the financial yardstick point of view, we of course are experiencing pressure. But as I mentioned in my comments on the unit side of things, our unit deliveries are up and we’re seeing success in markets around the world. So it really isn’t a time for us to strategically peel back on some of those things. In fact, it’s probably a time to increase, so that we can create more innovation out there and over the long-term, as I mentioned before, be able to reset the pricing in the market around new products and new innovation.

Great, that makes sense. Thank you.

Thank you.

Thank you. This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Doug Baesson, Chief Financial Officer.

Thanks to everyone for attending today, appreciate it. Take care.

Thank you, ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.