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Document and Entity Information - USD ($)
$ in Thousands
12 Months Ended
Dec. 30, 2017
Feb. 16, 2018
Jul. 01, 2017
Document And Entity Information      
Entity Registrant Name GARMIN LTD    
Entity Central Index Key 0001121788    
Document Type 10-K    
Trading Symbol GRMN    
Document Period End Date Dec. 30, 2017    
Amendment Flag false    
Current Fiscal Year End Date --12-30    
Entity a Well-known Seasoned Issuer Yes    
Entity a Voluntary Filer No    
Entity's Reporting Status Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Public Float     $ 6,129,443,292
Entity Common Stock, Shares Outstanding   198,077,418  
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2017    
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 30, 2017
Dec. 31, 2016
Current assets:    
Cash and cash equivalents $ 891,488 $ 846,883
Marketable securities (Note 3) 161,687 266,952
Accounts receivable, less allowance for doubtful accounts of $4,168 in 2017 and $14,669 in 2016 590,882 527,062
Inventories, net 517,644 484,821 [1]
Deferred costs 48,312 47,395
Prepaid expenses and other current assets 153,912 89,903
Total current assets 2,363,925 2,263,016
Property and equipment, net    
Land and improvements 114,701 104,740
Building and improvements 482,794 376,916
Office furniture and equipment 246,107 222,439
Manufacturing equipment 156,119 129,526
Engineering equipment 141,321 124,979
Vehicles 21,115 21,259
Total Property and equipment, gross 1,162,157 979,859
Accumulated depreciation (566,473) (496,981)
Property and equipment, net 595,684 482,878
Restricted cash (Note 4) 271 113
Marketable securities (Note 3) 1,260,033 1,213,285
Deferred income taxes (Note 6) 199,343 110,293
Noncurrent deferred costs 73,851 56,151
Intangible assets, net 409,801 305,002
Other assets 107,352 94,395
Total assets 5,010,260 4,525,133
Current liabilities:    
Accounts payable 169,640 172,404
Salaries and benefits payable 102,802 88,818
Accrued warranty costs 36,827 37,233
Accrued sales program costs 93,250 80,953
Deferred revenue 139,681 146,564
Accrued royalty costs 32,204 36,523
Accrued advertising expense 30,987 37,440
Other accrued expenses 93,652 70,469
Income taxes payable 33,638 16,163
Dividend payable 95,975 96,168
Total current liabilities 828,656 782,735
Deferred income taxes (Note 6) 75,215 61,220
Noncurrent income taxes 138,295 121,174
Noncurrent deferred revenue 163,840 140,407
Other liabilities 1,788 1,594
Stockholders' equity:    
Shares, CHF 0.10 par value, 198,077 shares authorized and issued, 188,189 shares outstanding at December 30, 2017; and 188,565 shares outstanding at December 31, 2016; (Notes 9, 10, and 11): 17,979 17,979
Additional paid-in capital 1,828,386 1,836,047
Treasury stock (468,818) (455,964)
Retained earnings 2,368,874 2,056,702
Accumulated other comprehensive income (loss) 56,045 (36,761)
Total stockholders' equity 3,802,466 3,418,003
Total liabilities and stockholders' equity $ 5,010,260 $ 4,525,133
[1] Inventory balances by major class of inventory as of December 31, 2016 have been recast to conform to the current year presentation.
Consolidated Balance Sheets (Parenthetical)
$ in Thousands
Dec. 30, 2017
USD ($)
shares
Dec. 30, 2017
SFr / shares
Dec. 31, 2016
USD ($)
shares
Dec. 31, 2016
SFr / shares
Allowance for doubtful accounts | $ $ 4,168   $ 14,669  
Common shares, authorized 198,077   198,077  
Common shares, issued 198,077   198,077  
Common shares, outstanding 188,189   188,565  
CHF [Member]        
Common shares, par value (in swiss francs per share) | SFr / shares   SFr 0.10   SFr 0.10
Consolidated Statements of Income - USD ($)
$ in Thousands
12 Months Ended
Dec. 30, 2017
Dec. 31, 2016
Dec. 26, 2015
Income Statement [Abstract]      
Net sales [1] $ 3,087,004 $ 3,018,665 $ 2,820,270
Cost of goods sold 1,303,840 1,339,095 1,281,566
Gross profit 1,783,164 1,679,570 1,538,704
Advertising expense 164,693 177,143 167,166
Selling, general and administrative expenses 437,977 410,558 394,914
Research and development expense 511,634 467,960 427,043
Total operating expense 1,114,304 1,055,661 989,123
Operating income 668,860 623,909 549,581
Other income (expense):      
Interest income 36,925 33,406 29,653
Foreign currency losses (22,579) (31,651) (23,465)
Other (912) 4,006 11,418
Total other income (expense) 13,434 5,761 17,606
Income before income taxes 682,294 629,670 567,187
Income tax provision (benefit): (Note 6)      
Current 79,234 117,842 114,222
Deferred (91,895) 1,014 (3,262)
Income tax provision (12,661) 118,856 110,960
Net income $ 694,955 $ 510,814 $ 456,227
Basic net income per share (Note 10) (in dollars per share) $ 3.70 $ 2.71 $ 2.39
Diluted net income per share (Note 10) (in dollars per share) $ 3.68 $ 2.70 $ 2.39
[1] The U.S. is the only country which constitutes greater than 10% of net sales to external customers.
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
12 Months Ended
Dec. 30, 2017
Dec. 31, 2016
Dec. 26, 2015
Statement of Comprehensive Income [Abstract]      
Net income $ 694,955 $ 510,814 $ 456,227
Foreign currency translation adjustment 88,320 4,696 (34,981)
Change in fair value of available-for-sale marketable securities, net of deferred taxes 4,486 (11,029) 1,982
Comprehensive income $ 787,761 $ 504,481 $ 423,228
Consolidated Statements of Stockholders' Equity - USD ($)
$ in Thousands
Common Stock [Member]
Additional Paid-In Capital [Member]
Treasury Stock [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Total
Balance at beginning at Dec. 27, 2014 $ 1,797,435 $ 73,521 $ (330,132) $ 1,859,972 $ 2,571 $ 3,403,367
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income       456,227   456,227
Translation adjustment         (34,981) (34,981)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects         1,982 1,982
Comprehensive income           423,228
Dividends declared   (100)   (385,682)   (385,782)
Tax benefit from issuance of equity awards   (2,050)       (2,050)
Issuance of treasury stock related to equity awards   (35,422) 52,494     17,072
Stock compensation   26,290       26,290
Purchase of treasury stock related to equity awards     (5,586)     (5,586)
Purchase of treasury stock under share repurchase plan     (131,413)     (131,413)
Balance at end at Dec. 26, 2015 1,797,435 62,239 (414,637) 1,930,517 (30,428) 3,345,126
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income       510,814   510,814
Translation adjustment         4,696 4,696
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects         (11,029) (11,029)
Comprehensive income           504,481
Dividends declared       (384,629)   (384,629)
Tax benefit from issuance of equity awards   (6,309)       (6,309)
Issuance of treasury stock related to equity awards   (40,589) 59,237     18,648
Stock compensation   41,250       41,250
Purchase of treasury stock related to equity awards     (7,331)     (7,331)
Purchase of treasury stock under share repurchase plan     (93,233)     (93,233)
Reduction in par value of Common Stock (1,779,456) 1,779,456        
Balance at end at Dec. 31, 2016 17,979 1,836,047 (455,964) 2,056,702 (36,761) 3,418,003
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income       694,955   694,955
Translation adjustment         88,320 88,320
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects         4,486 4,486
Comprehensive income           787,761
Dividends declared       (382,783)   (382,783)
Issuance of treasury stock related to equity awards   (52,581) 74,442     21,861
Stock compensation   44,735       44,735
Purchase of treasury stock related to equity awards   185 (12,773)     (12,588)
Purchase of treasury stock under share repurchase plan     (74,523)     (74,523)
Balance at end at Dec. 30, 2017 $ 17,979 $ 1,828,386 $ (468,818) $ 2,368,874 $ 56,045 $ 3,802,466
Consolidated Statements of Stockholders' Equity (Parenthetical) - USD ($)
$ in Thousands
12 Months Ended
Dec. 30, 2017
Dec. 31, 2016
Dec. 26, 2015
Statement of Stockholders' Equity [Abstract]      
Adjustment related to unrealized gains (losses) on available-for-sale securities income tax effects $ 493 $ 1,094 $ 115
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Dec. 30, 2017
Dec. 31, 2016
Dec. 26, 2015
Operating Activities:      
Net income $ 694,955 $ 510,814 $ 456,227
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation 59,895 55,796 51,311
Amortization 26,357 30,544 27,049
Gain on sale of property and equipment (230) (503) (198)
Provision for doubtful accounts 1,021 4,136 (2,521)
Provision for obsolete and slow-moving inventories 31,071 26,458 23,257
Unrealized foreign currency losses 21,036 13,387 37,931
Deferred income taxes (90,725) 1,699 5,897
Stock compensation 44,735 41,250 26,290
Realized losses (gains) on marketable securities 991 (822) (55)
Changes in operating assets and liabilities, net of acquisitions:      
Accounts receivable (40,088) 9,000 22,473
Inventories (38,575) (2,455) (121,718)
Other current and non-current assets (21,608) 2,234 (107,360)
Accounts payable (17,240) (11,496) 36,079
Other current and non-current liabilities 5,627 44,766 20,742
Deferred revenue 15,329 (6,363) (43,338)
Deferred costs (18,266) (15,780) (585)
Income taxes payable (13,443) 3,017 (151,014)
Net cash provided by operating activities 660,842 705,682 280,467
Investing activities:      
Purchases of property and equipment (139,696) (90,960) (80,592)
Proceeds from sale of property and equipment 361 676 7,921
Purchase of intangible assets (12,232) (5,715) (3,889)
Purchase of marketable securities (587,656) (905,089) (915,921)
Redemption of marketable securities 635,311 957,350 919,141
Acquisitions, net of cash acquired (90,471) (77,945) (38,687)
Change in restricted cash (153) 146 48
Net cash used in investing activities (194,536) (121,537) (111,979)
Financing activities:      
Dividends (382,976) (481,452) (378,117)
Tax benefit from issuance of equity awards 1,692 (2,049)
Proceeds from issuance of treasury stock related to equity awards 21,860 18,648 17,073
Purchase of treasury stock related to equity awards (12,773) (7,331) (5,586)
Purchase of treasury stock under share repurchase plan (74,523) (93,233) (131,413)
Net cash used in financing activities (448,412) (561,676) (500,092)
Effect of exchange rate changes on cash and cash equivalents 26,711 (8,656) (31,594)
Net increase (decrease) in cash and cash equivalents 44,605 13,813 (363,198)
Cash and cash equivalents at beginning of year 846,883 833,070 1,196,268
Cash and cash equivalents at end of year 891,488 846,883 833,070
Supplemental disclosures of cash flow information      
Cash paid during the year for income taxes 106,146 115,548 252,885
Cash received during the year from income tax refunds 3,806 4,275 3,793
Supplemental disclosure of non-cash investing and financing activities      
Increase in accrued capital expenditures related to purchases of property and equipment 13,864 2,154
Change in marketable securities related to unrealized appreciation (depreciation) 4,979 (12,123) 1,867
Fair value of assets acquired 128,190 91,620 38,687
Liabilities assumed (29,587) (6,344)
Less: cash acquired (8,132) (7,331)
Cash paid for acquisitions, net of cash acquired $ 90,471 $ 77,945 $ 38,687
Description of the Business
12 Months Ended
Dec. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of the Business

1. Description of the Business

 

Garmin Ltd. and subsidiaries (together, the “Company”) design, develop, manufacture, market, and distribute a diverse family of hand-held, wrist-based, portable and fixed-mount Global Positioning System (GPS)-enabled products and other navigation, communications, information and sensor-based products. Garmin Corporation (GC) is primarily responsible for the manufacturing and distribution of the Company’s products to the Company’s subsidiaries and, to a lesser extent, new product development and sales and marketing of the Company’s products in Asia and the Far East. Garmin International, Inc. (GII) is primarily responsible for sales and marketing of the Company’s products in the Americas region and for most of the Company’s research and new product development. GII also manufactures most of the Company’s products in the aviation segment. Garmin (Europe) Ltd. (GEL) is responsible for sales and marketing of the Company’s products in Europe, the Middle East and Africa (EMEA). Many of GEL’s sales are to other Company-owned distributors in the EMEA region.

Summary of Significant Accounting Policies
12 Months Ended
Dec. 30, 2017
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

 

Basis of Presentation and Principles of Consolidation

 

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

 

At the Company’s Annual General Meeting on June 10, 2016, the Company’s shareholders approved the cancellation of 10,000,000 registered shares of the Company held by the Company (the “Formation Shares”) and the reduction in par value of each share of the Company from CHF 10 to CHF 0.10 and the amendment of the Company’s Articles of Association to effect a corresponding share capital reduction.

 

Fiscal Year

 

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

 

In those resulting fiscal years that have 53 weeks, the Company will record an extra week of sales, costs, and related financial activity. Therefore, the financial results of those 53-week fiscal years, and the associated 14-week fourth quarters, will not be entirely comparable to the prior and subsequent 52-week fiscal years and the associated 13-week quarters. Fiscal years 2017 and 2015 included 52 weeks while fiscal 2016 included 53 weeks.

 

Use of Estimates

 

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

 

Foreign Currency

 

Many Garmin Ltd. subsidiaries utilize currencies other than the United States Dollar (USD) as their functional currency. As required by the Foreign Currency Matters topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC), the financial statements of these subsidiaries for all periods presented have been translated into USD, the functional currency of Garmin Ltd., and the reporting currency herein, for purposes of consolidation at rates prevailing during the year for sales, costs, and expenses and at end-of-year rates for all assets and liabilities. The effect of this translation is recorded in a separate component of stockholders’ equity. Cumulative currency translation adjustments of $78,909 and ($9,411) as of December 30, 2017 and December 31, 2016, respectively, have been included in accumulated other comprehensive income in the accompanying consolidated balance sheets.

 

Transactions in foreign currencies are recorded at the approximate rate of exchange at the transaction date. The movements of the Taiwan Dollar and Euro/British Pound Sterling typically have offsetting impacts on operating income when the currencies move congruently against the U.S. Dollar due to the use of the Taiwan Dollar for manufacturing costs while the Euro and British Pound Sterling transactions relate primarily to revenue.

 

Assets and liabilities resulting from these transactions are translated at the rate of exchange in effect at the balance sheet date. The majority of the Company’s consolidated foreign currency gain or loss is typically driven by the significant cash and marketable securities, receivables and payables held in a currency other than the functional currency at a given legal entity. Foreign currency losses recorded in results of operations were $22,579, $31,651, and $23,465 for the years ended December 30, 2017, December 31, 2016, and December 26, 2015, respectively. The loss in fiscal 2017 was due primarily to the USD weakening against the Taiwan Dollar, which was partially offset by the USD weakening against the Euro and British Pound Sterling. The loss in fiscal 2016 was due primarily to the USD weakening against the Taiwan Dollar and the USD strengthening against the Euro and British Pound Sterling. The loss in fiscal 2015 was due primarily to the USD strengthening against the Euro and British Pound Sterling, which was partially offset by the USD strengthening against the Taiwan Dollar.

 

Earnings Per Share

 

Basic earnings per share amounts are computed based on the weighted-average number of common shares outstanding. For purposes of diluted earnings per share, the number of shares that would be issued from the exercise of dilutive share-based compensation awards has been reduced by the number of shares which could have been purchased from the proceeds of the exercise or release at the average market price of the Company’s stock during the period the awards were outstanding. See Note 10.

 

Cash and Cash Equivalents

 

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

 

Trade Accounts Receivable

 

The Company sells its products to retailers, wholesalers, and other customers and extends credit based on its evaluation of the customer’s financial condition.  Potential losses on receivables are dependent on each individual customer’s financial condition. The Company carries its trade accounts receivable at net realizable value. Typically, its accounts receivable are collected within 80 days and do not bear interest. The Company monitors its exposure to losses on receivables and maintains allowances for potential losses or adjustments. The Company determines these allowances by (1) evaluating the aging of its receivables and (2) reviewing its high-risk customers. Past due receivable balances are written off when internal collection efforts have been unsuccessful in collecting the amount due. The Company maintains trade credit insurance to provide security against large losses.

 

Concentration of Credit Risk

 

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

 

The Company’s top ten customers have contributed between 22% and 24% of net sales since 2015. None of the Company’s customers accounted for more than or equal to 10% of consolidated net sales in the years ended December 30, 2017, December 31, 2016, and December 26, 2015.

 

Inventories

 

Inventories are stated at the lower of cost or market with cost being determined on a first-in, first-out (FIFO) basis. The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Inventories consisted of the following:

 

    December 30, 2017     December 31, 2016(1)  
Raw materials   $ 179,659     $ 152,497  
Work-in-process     75,754       61,048  
Finished goods     262,231       271,276  
Inventory   $ 517,644     $ 484,821  

 

  (1) Inventory balances by major class of inventory as of December 31, 2016 have been recast to conform to the current year presentation.

 

Property and Equipment

 

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

 

Buildings and improvements     39-50  
Office furniture and equipment     3-5  
Manufacturing and engineering equipment     5-10  
Vehicles     5  

 

Long-Lived Assets

 

As required by the Property, Plant and Equipment topic of the FASB ASC, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be fully recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. That assessment is based on the carrying amount of the asset at the date it is tested for recoverability. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value.

 

The Intangibles – Goodwill and Other topic of the FASB ASC (ASC Topic 350) requires that goodwill and intangible assets with indefinite useful lives should not be amortized but rather be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that they may be impaired. The Company performs its annual goodwill and intangible asset impairment tests in the fourth quarter of each year. ASC Topic 350 allows management to first perform a qualitative assessment (“step zero”) by assessing the qualitative factors of relevant events and circumstances at the reporting unit level to determine if it is necessary to perform the quantitative goodwill impairment test (“step one”). If factors indicate that it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then the step one assessment will be performed. If the fair value of the reporting unit is less than the carrying amount in step one then goodwill impairment will be recognized and the charge is determined through the “step two” analysis.

 

Each of the Company’s operating segments (auto PND, auto OEM, aviation, marine, outdoor, and fitness) represents a distinct reporting unit. The auto PND market has declined in recent years as competing technologies have emerged and market saturation has occurred. This has resulted in periods of lower revenues and profits for the Company’s auto PND reporting unit. Considering these qualitative factors, management performed a step one quantitative goodwill impairment assessment of the auto PND reporting unit in the fourth quarter of 2017. Management determined that the fair value of the reporting unit was substantially in excess of its carrying amount, and a step two analysis was therefore not performed. However, considering the uncertainty of future operating results and/or market conditions deteriorating faster or more drastically than the forecasts utilized in management’s estimation of fair value, management believes some or all of the approximately $80 million of goodwill associated with the Company’s auto PND reporting unit is at risk of future impairment. Management concluded that no other reporting units are currently at risk of impairment.

 

The Company did not recognize any material goodwill or intangible asset impairment charges in 2017, 2016, or 2015.

 

Accounting guidance also requires that intangible assets with finite lives be amortized over their estimated useful lives and reviewed for impairment. The Company is currently amortizing its acquired intangible assets with finite lives over periods ranging from three to ten years.

 

Dividends

 

Under Swiss corporate law, dividends must be approved by shareholders at the general meeting of the Company’s shareholders.

 

On June 9, 2017, the shareholders approved a dividend of $2.04 per share (of which, $1.53 was paid in the Company’s 2017 fiscal year) payable in four equal installments on dates determined by the Board of Directors. The dates determined by the Board were as follows:

 

Dividend Date   Record Date   $s per share  
June 30, 2017   June 19, 2017   $ 0.51  
September 29, 2017   September 15, 2017   $ 0.51  
December 29, 2017   December 15, 2017   $ 0.51  
March 30, 2018   March 15, 2018   $ 0.51  

 

The Company paid dividends in 2017 in the amount of $382,976. Both the dividends paid and the remaining dividend payable were reported as a reduction of retained earnings.

 

On June 10, 2016, the shareholders approved a dividend of $2.04 per share (of which, $1.53 was paid in the Company’s 2016 fiscal year) payable in four equal installments on dates determined by the Board of Directors. The dates determined by the Board were as follows:

 

Dividend Date   Record Date   $s per share  
June 30, 2016   June 16, 2016   $ 0.51  
September 30, 2016   September 15, 2016   $ 0.51  
December 30, 2016   December 14, 2016   $ 0.51  
March 31, 2017   March 15, 2017   $ 0.51  

 

The Company paid dividends in 2016 in the amount of $481,452. Both the dividends paid and the remaining dividend payable were reported as a reduction of retained earnings.

 

On June 5, 2015, the shareholders approved a dividend of $2.04 per share (of which, $1.02 was paid in the Company's 2015 fiscal year) payable in four equal installments on dates determined by the Board of Directors. The dates determined by the Board were as follows:

 

Dividend Date   Record Date   $s per share  
June 30, 2015   June 16, 2015   $ 0.51  
September 30, 2015   September 15, 2015   $ 0.51  
December 31, 2015   December 15, 2015   $ 0.51  
March 31, 2016   March 16, 2016   $ 0.51  

 

The Company paid dividends in 2015 in the amount of $378,117. Both the dividends paid and the remaining dividend payable were reported as a reduction of retained earnings.

 

As of December 30, 2017 and December 31, 2016, approximately $304,674 of retained earnings was indefinitely restricted from distribution to stockholders pursuant to the laws of Taiwan.

 

Intangible Assets

 

At December 30, 2017, and December 31, 2016, the Company had patents, customer related intangibles and other identifiable finite-lived intangible assets recorded at a cost of $316,705 and $253,473, respectively. Identifiable, finite-lived intangible assets are amortized over their estimated useful lives on a straight-line basis over three to ten years. Accumulated amortization was $193,886 and $173,023 at December 30, 2017, and December 31, 2016, respectively. Amortization expense on these intangible assets was $20,863, $14,319, and $7,115 for the years ended December 30, 2017, December 31, 2016, and December 26, 2015, respectively. In the next five years, the amortization expense is estimated to be $18,796, $16,293, $14,167, $10,463, and $8,111, respectively.

 

The Company’s excess purchase cost over fair value of net assets acquired (goodwill) was $286,982 at December 30, 2017, and $224,553 at December 31, 2016.

 

    December 30,
2017
    December 31,
2016
 
Goodwill balance at beginning of year   $ 224,553     $ 187,791  
Acquisitions     58,332       38,061  
Finalization of purchase price allocations and effect of foreign currency translation     4,097       (1,299 )
Goodwill balance at end of year   $ 286,982     $ 224,553  

 

Marketable Securities

 

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

 

All of the Company’s marketable securities were considered available-for-sale at December 30, 2017. Available-for-sale securities are stated at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive income (loss). At December 30, 2017 and December 31, 2016, cumulative unrealized net losses of $22,864 and $27,350, respectively, were reported in accumulated other comprehensive income, net of related taxes.

 

Investments are reviewed periodically to determine if they have suffered an impairment of value that is considered other than temporary. If investments are determined to be impaired, a loss is recognized at the date of determination.

 

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

 

The amortized cost of debt securities classified as available-for-sale is adjusted for amortization of premiums and accretion of discounts to maturity, or in the case of mortgage-backed securities, over the estimated life of the security. Such amortization is included in interest income from investments. Realized gains and losses, and credit declines in value judged to be other-than-temporary are included in other income. The cost of securities sold is based on the specific identification method.

 

Investments are discussed in detail in Note 3 of the Notes to Consolidated Financial Statements.

 

Income Taxes

 

The Company accounts for income taxes using the liability method in accordance with the FASB ASC 740 topic Income Taxes. The liability method provides that deferred tax assets and liabilities are recorded based on the difference between the tax bases of assets and liabilities and their carrying amount for financial reporting purposes as measured based on the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

The Company accounts for uncertainty in income taxes in accordance with the FASB ASC 740 topic Income Taxes.  The Company recognizes liabilities based on our estimate of whether, and the extent to which, additional taxes will be due. If payment of these amounts ultimately proves not to be required, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary. If the Company’s estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result.

 

Income taxes are discussed in detail in Note 6 of the Notes to Consolidated Financial Statements.

 

Revenue Recognition

 

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable.  For the large majority of the Company’s sales, these criteria are met once product has shipped and title and risk of loss have transferred to the customer.  The Company recognizes revenue from the sale of hardware products and software bundled with hardware that is essential to the functionality of the hardware in accordance with general revenue recognition accounting guidance. The Company recognizes revenue in accordance with industry specific software accounting guidance for standalone sales of software products and sales of software bundled with hardware not essential to the functionality of the hardware.  The Company generally does not offer specified or unspecified upgrade rights to its customers in connection with software sales.

 

For multiple-element arrangements that include tangible products that contain software essential to the tangible product’s functionality and undelivered software elements that relate to the tangible product’s essential software, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the accounting principles establish a hierarchy to determine the selling price to be used for allocating revenue to deliverables as follows: (i) vendor-specific objective evidence of fair value (VSOE), (ii) third-party evidence of selling price (TPE), and (iii) best estimate of the selling price (ESP).  VSOE generally exists only when the Company sells the deliverable separately, on more than a limited basis, at prices within a relatively narrow range.  In addition to the products listed below, the Company has offered certain other products including mobile applications, in-dash navigation solutions, incremental navigation and/or communication service subscriptions, aviation subscriptions and extended warranties that involve multiple-element arrangements that are individually immaterial.

 

The Company offers PNDs with lifetime map updates (LMUs) bundled in the original purchase price.  LMUs enable customers to download the latest map and point of interest information for the useful life of their PND.  In addition, the Company offers PNDs with traffic service bundled in the original purchase price.  The Company has identified multiple deliverables contained in arrangements involving the sale of PNDs which include the LMU and/or traffic service.  The first deliverable is the hardware along with the software essential to the functionality of the hardware device delivered at the time of sale.  The remaining deliverables are the LMU and/or traffic service.  The Company has allocated revenue between these deliverables using the relative selling price method.  Amounts allocated to the delivered hardware and the related essential software are recognized at the time of sale provided the other conditions for revenue recognition have been met.  The revenue and associated cost of royalties allocated to the LMU and/or the traffic service are deferred and recognized on a straight-line basis over the estimated life of the products.

 

The Company has determined sufficient VSOE does not exist for LMU or traffic, and that third party evidence of selling price is not available as stand-alone and unbundled unit sales do not occur on more than a limited basis. Therefore, the Company uses the royalty cost plus a normal margin as the primary indicator to calculate relative selling prices of the LMU and traffic elements.

 

For multiple-element software arrangements that do not include a tangible product, the Company allocates revenue to the various elements based on VSOE. When VSOE cannot be established for undelivered elements, all revenue is deferred until the earlier point at which all elements of the arrangement are delivered or sufficient VSOE does exist, unless the only undelivered element is post-contract customer support. If the only undelivered element is post-contract customer support, the entire arrangement consideration is recognized ratably over the support period. The Company offers navigation software licenses to certain customers, bundled with map updates to be provided periodically over the support period. The Company has determined sufficient VSOE of similar map updates does not exist for certain arrangements, and therefore revenue from these transactions is recognized ratably over the contractual map update period.

 

The Company records revenue net of sales tax, trade discounts and customer returns.  The Company records estimated reductions to revenue for customer sales programs, returns and incentive offerings including rebates, price protection (product discounts offered to retailers to assist in clearing older products from their inventories in advance of new product releases), promotions and other volume-based incentives.  The reductions to revenue are based on estimates and judgments using historical experience and expectation of future conditions.  Changes in these estimates could negatively affect the Company’s operating results.   These incentives are reviewed periodically and, with the exceptions of price protection and certain other promotions, accrued for on a percentage of sales basis.   If market conditions were to decline, the Company may take actions to increase customer incentive offerings, possibly resulting in an incremental reduction of revenue at the time the incentive is offered.

 

Deferred Revenues and Costs

 

At December 30, 2017 and December 31, 2016, the Company had deferred revenues totaling $303,521 and $286,971, respectively, and related deferred costs totaling $122,162 and $103,546, respectively.

 

The deferred revenues and costs are recognized over their estimated economic lives, typically one to five years, on a straight-line basis. In the next five years, the gross margin recognition of deferred revenue and cost for the currently deferred amounts is estimated to be $91,370, $48,627, $25,340, $11,208, and $4,814, respectively.

 

Shipping and Handling Costs

 

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

 

Product Warranty

 

The Company provides for estimated warranty costs at the time of sale.  The Company’s standard warranty obligation to retail partners generally provides for a right of return of any product for a full refund in the event that such product is not merchantable, is damaged or defective.  The Company’s historical experience is that these types of warranty obligations are generally fulfilled within 5 months from time of sale.  The Company’s standard warranty obligation to its end-users provides for a period of one to two years from date of shipment while certain aviation and auto OEM products have a warranty period of two years or more from the date of installationThe Company’s estimate of costs to service its warranty obligations are based on historical experience and expectations of future conditions and are recorded as a liability on the balance sheet.  To the extent the Company experiences increased warranty claim activity or increased costs associated with servicing those claims, its warranty accrual will increase, resulting in decreased gross profit. The following reconciliation provides an illustration of changes in the aggregate warranty accrual:

 

    Fiscal Year Ended  
    December 30,     December 31,     December 26,  
    2017     2016     2015  
                   
Balance - beginning of period   $ 37,233     $ 30,449     $ 27,609  
Accrual for products sold(1)     56,360       61,578       44,620  
Expenditures     (56,766 )     (54,794 )     (41,780 )
Balance - end of period   $ 36,827     $ 37,233     $ 30,449  

 

  (1) Changes in cost estimates related to pre-existing warranties are not material and aggregated with accruals for new warranty contracts in the ‘accrual for products sold’ line.

 

Sales Programs

 

The Company provides certain monthly and quarterly incentives for its dealers and distributors based on various factors including dealer purchasing volume and growth. Additionally, from time to time, the Company provides rebates to end users on certain products. Estimated rebates and incentives payable to dealers and distributors are regularly reviewed and recorded as accrued expenses on a monthly basis. In addition, the Company provides dealers and distributors with product discounts to assist these customers in clearing older products from their inventories in advance of new product releases. Each discount is tied to a specific product and can be applied to all customers who have purchased the product, or a special discount may be agreed to on an individual customer basis. These rebates, incentives, and discounts are recorded as reductions to net sales in the accompanying consolidated statements of income in the period the Company has sold the product.

 

Advertising Costs

 

The Company expenses advertising costs as incurred. Advertising expense amounted to approximately $164,693, $177,143, and $167,166 for the years ended December 30, 2017, December 31, 2016, and December 26, 2015, respectively.

 

Research and Development

 

A majority of the Company’s research and development is performed in the United States. Research and development costs, which are expensed as incurred, amounted to approximately $511,634, $467,960, and $427,043 for the years ended December 30, 2017, December 31, 2016, and December 26, 2015, respectively.

 

Customer Service and Technical Support

 

Customer service and technical support costs are included as selling, general and administrative expenses in the accompanying consolidated statements of income. Customer service and technical support costs include costs associated with performing order processing, answering customer inquiries by telephone and through websites, e-mail and other electronic means, and providing free technical support assistance to customers. The technical support is typically provided within one year after the associated revenue is recognized. The related cost of providing this free support is not material.

 

Software Development Costs

 

The FASB ASC topic entitled Software requires companies to expense software development costs as they incur them until technological feasibility has been established, at which time those costs are capitalized until the product is available for general release to customers. Capitalized software development costs are not significant as the time elapsed from working model to release is typically short. As required by the Research and Development topic of the FASB ASC, costs incurred to enhance our existing products or after the general release of the service using the product are expensed in the period they are incurred and included in research and development costs in the accompanying consolidated statements of income.

 

Accounting for Stock-Based Compensation

 

The Company currently sponsors four stock-based employee compensation plans. The FASB ASC topic entitled Compensation – Stock Compensation requires the measurement and recognition of compensation expenses for all share-based payment awards made to employees and directors, including employee stock options and restricted stock, based on estimated fair values.

 

Accounting guidance requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as stock-based compensation expense over the requisite service period in the Company’s consolidated financial statements.

 

As stock-based compensation expenses recognized in the accompanying consolidated statements of income are based on awards ultimately expected to vest, they have been reduced for estimated forfeitures. Accounting guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience and management’s estimates.

 

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which is intended to simplify the accounting for share-based payment awards. The Company adopted ASU 2016-09 on a prospective basis during the quarter ended April 1, 2017. ASU 2016-09 requires excess tax benefits or deficiencies from stock-based compensation to be recognized in the income tax provision. We previously recorded these amounts to additional paid-in capital. Additionally, under ASU 2016-09, excess tax benefits and deficiencies are not estimated in the effective tax rate, rather, are recorded as discrete tax items in the period they occur. Excess income tax benefits from stock-based compensation arrangements are classified as a cash flow from operations under ASU 2016-09, rather than as a cash flow from financing activities. The most significant impact of ASU 2016-09 during the fiscal year ending December 30, 2017 was the recognition of income tax expense of $22,620 resulting from stock options and stock appreciation rights expiring unexercised in the second and fourth quarters.

 

Stock compensation plans are discussed in detail in Note 9 of the Notes to Consolidated Financial Statements.

 

Recently Issued Accounting Pronouncements

 

Revenue from Contracts with Customers

 

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes previous revenue recognition guidance. The FASB has issued several standards amending or relating to ASU 2014-09 (collectively, the “new revenue standard”). The effective date of ASU 2014-09 is for fiscal years, and interim periods within those years, beginning on or after December 15, 2017. The Company has adopted the new revenue standard in the first quarter of the Company’s fiscal year ending December 29, 2018 using the full retrospective method, which will require the Company to restate each prior reporting period presented in future financial statement issuances.

 

The Company has evaluated Topic 606, and has assessed existing and historical contracts to identify possible differences in the timing of revenue recognition under the new revenue standard. During this evaluation, both senior management and the Audit Committee have been updated as to progress and findings on a frequent basis. Based on our evaluation of the new revenue standard, our recognition will be consistent with our historical accounting policies except for certain arrangements within the Company’s auto segment.

 

A portion of the Company’s auto segment contracts have historically been accounted for under Accounting Standards Codification Topic 985-605 Software-Revenue Recognition (Topic 985-605). Under Topic 985-605, the Company deferred revenue and associated costs of all elements of multiple-element software arrangements if vendor-specific objective evidence of fair value (VSOE) could not be established for an undelivered element (e.g. map updates). In applying the new revenue standard to certain contracts that include both software licenses and map updates, we will recognize the portion of revenue and costs related to the software license at the time of delivery rather than ratably over the map update period.

 

Additionally, for certain multiple-element arrangements within the Company’s auto segment, the Company’s policy has been to allocate consideration to traffic services and recognize the revenue and associated cost of royalties ratably over the estimated life of the underlying product. Under the new revenue standard, we will recognize revenue and associated costs of royalties related to certain traffic services at the time of hardware and/or software delivery. Specifically, the new revenue standard emphasize the timing of the Company’s performance, and upon delivery of the navigation device and/or software, the Company has performed its obligation with respect to the design and production of the product to receive and interpret the broadcast traffic signal for the benefit of the end user.

 

The changes in accounting policy described above collectively result in reductions to deferred costs (asset) and deferred revenue (liability) balances, and accelerate the recognition of revenues and deferred costs in the auto segment going forward. Summarized financial information depicting the impact of the new revenue standard follows:

 

    52-Weeks Ended December 30, 2017     53-Weeks Ended December 31, 2016  
    As reported     Restated(1)     Impact     As reported     Restated(1)     Impact  
Net sales   $ 3,087,004     $ 3,121,560     $ 34,556     $ 3,018,665     $ 3,045,796     $ 27,131  
Gross profit     1,783,164       1,797,941       14,777       1,679,570       1,688,525       8,955  
Operating income     668,860       683,637       14,777       623,909       632,864       8,955  
Income tax (benefit) provision     (12,661 )     (7,902 )     4,759       118,856       122,890       4,034  
Net income   $ 694,955     $ 704,973     $ 10,018     $ 510,814     $ 515,735     $ 4,921  
Diluted net income per share   $ 3.68     $ 3.74     $ 0.06     $ 2.70     $ 2.72     $ 0.02  

 

    December 30, 2017     December 31, 2016  
    As reported     Restated(1)     Impact     As reported     Restated(1)     Impact  
Current assets:                                                
Deferred costs   $ 48,312     $ 30,525     $ (17,787 )   $ 47,395     $ 34,665     $ (12,730 )
Total current assets     2,363,925       2,346,139       (17,786 )     2,263,016       2,250,286       (12,731 )
Noncurrent deferred income tax     199,343       189,959       (9,384 )     110,293       105,668       (4,625 )
Noncurrent deferred costs     73,851       33,029       (40,822 )     56,151       30,934       (25,217 )
Total assets   $ 5,010,260     $ 4,942,268     $ (67,991 )   $ 4,525,133     $ 4,482,560     $ (42,573 )
Current liabilities:                                                
Deferred revenue     139,681       103,140       (36,542 )     146,564       118,496       (28,068 )
Total current liabilities     828,656       792,115       (36,541 )     782,735       754,667       (28,068 )
Deferred income taxes     75,215       76,612       1,396       61,220       62,617       1,397  
Non-current deferred revenue     163,840       87,061       (76,779 )     140,407       91,238       (49,169 )
Retained earnings     2,368,874       2,412,423       43,549       2,056,702       2,090,233       33,531  
Accumulated other comprehensive income     56,045       56,428       382       (36,761 )     (37,024 )     (263 )
Total stockholders' equity     3,802,466       3,846,397       43,931       3,418,003       3,451,271       33,268  
Total liabilities and stockholders' equity   $ 5,010,260     $ 4,942,267     $ (67,992 )   $ 4,525,133     $ 4,482,561     $ (42,572 )

 

(1) Effective for the fiscal year ending December 29, 2018, we have adopted ASC Topic 606. The balances above are restated under ASC Topic 606.

 

The Company’s historical net cash flows provided by or used in operating, investing, and financing activities are not impacted by adoption of the new revenue standard.

 

Financial Instruments – Recognition, Measurement, Presentation, and Disclosure

 

In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company will adopt the new standard effective in the first quarter of fiscal year 2018, and it is not expected to have a material impact on the Company’s financial position or results of operations.

 

Leases

 

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to present a right-of-use asset and a corresponding lease liability on the balance sheet. Lessor accounting is substantially unchanged compared to the current accounting guidance. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting the new standard on its consolidated financial statements.

 

Statement of Cash Flows

 

In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. The standard addresses eight specific cash flow issues with the objective of reducing diversity in practice. ASU 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company will adopt the new standard effective in the first quarter of fiscal year 2018, and it is not expected to have a material impact on the Company’s financial position of results of operations.

 

Income Taxes

 

In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory (“ASU 2016-16”), which requires recognition of the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company will adopt the new standard effective in the first quarter of fiscal year 2018, and it is not expected to have a material impact on the Company’s financial position or results of operations.

 

Receivables – Nonrefundable Fees and Other Costs

 

In March 2017, the FASB issued Accounting Standards Update No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Topic 310-20): Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”), which shortens the amortization period for certain callable debt securities held at a premium, requiring the premium to be amortized to the earliest call date. Callable debt securities held at a discount continue to be amortized to maturity. ASU 2017-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of adopting the new standard on its consolidated financial statements.

 

Income Statement – Reporting Comprehensive Income

 

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which allows for stranded tax effects in accumulated other comprehensive income resulting from the U.S. Tax Cuts and Jobs Act to be reclassified to retained earnings. ASU 2018-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting the new standard and expects to early adopt the new standard effective in the first quarter of fiscal year 2018. The Company does not expect the new standard to have a material impact on the Company’s financial position or results of operations.

Marketable Securities
12 Months Ended
Dec. 30, 2017
Investments, Debt and Equity Securities [Abstract]  
Marketable Securities

3. Marketable Securities

 

The FASB ASC topic entitled Fair Value Measurements and Disclosures defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The accounting guidance classifies the inputs used to measure fair value into the following hierarchy:

 

  Level 1 Unadjusted quoted prices in active markets for identical assets or liability

 

  Level 2 Observable inputs for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
 
  Level 3 Unobservable inputs for the asset or liability

 

The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Valuation is based on prices obtained from an independent pricing vendor using both market and income approaches. The primary inputs to the valuation include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, and credit spreads.

 

The method described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

Available-for-sale securities measured at fair value on a recurring basis are summarized below:

 

    Fair Value Measurements as
of December 30, 2017
 
    Total     Level 1     Level 2     Level 3  
U.S. Treasury securities   $ 19,337     $ -     $ 19,337     $ -  
Agency securities     43,361       -       43,361       -  
Mortgage-backed securities     174,615       -       174,615       -  
Corporate securities     816,793       -       816,793       -  
Municipal securities     186,105       -       186,105       -  
Other     181,509       -       181,509       -  
Total   $ 1,421,720     $ -     $ 1,421,720     $ -  

 

    Fair Value Measurements as
of December 31, 2016
 
    Total     Level 1     Level 2     Level 3  
U.S. Treasury securities   $ 29,034     $ -     $ 29,034     $ -  
Agency securities     59,541       -       59,541       -  
Mortgage-backed securities     230,823       -       230,823       -  
Corporate securities     893,725       -       893,725       -  
Municipal securities     176,168       -       176,168       -  
Other     90,946       -       90,946       -  
Total   $ 1,480,237     $ -     $ 1,480,237     $ -  

 

Marketable securities classified as available-for-sale securities are summarized below:

 

    Available-For-Sale Securities as
of December 30, 2017
 
       
    Amortized Cost     Gross Unrealized
Gains
    Gross Unrealized
Losses
    Fair Value  
U.S. Treasury securities   $ 19,591     $ -     $ (254 )   $ 19,337  
Agency securities     44,191       1       (831 )     43,361  
Mortgage-backed securities     180,470       13       (5,868 )     174,615  
Corporate securities     830,447       136       (13,790 )     816,793  
Municipal securities     187,999       110       (2,004 )     186,105  
Other     183,730       2       (2,223 )     181,509  
Total   $ 1,446,428     $ 262     $ (24,970 )   $ 1,421,720  

 

    Available-For-Sale Securities as
of December 31, 2016
 
       
    Amortized Cost     Gross Unrealized
Gains
    Gross Unrealized
Losses
    Fair Value  
U.S. Treasury securities   $ 29,291     $ 31     $ (288 )   $ 29,034  
Agency securities     60,513       19       (991 )     59,541  
Mortgage-backed securities     236,354       41       (5,572 )     230,823  
Corporate securities     914,028       252       (20,555 )     893,725  
Municipal securities     178,804       224       (2,859 )     176,169  
Other     90,934       20       (9 )     90,945  
Total   $ 1,509,924     $ 587     $ (30,274 )   $ 1,480,237  

 

The Company’s investment policy targets low risk investments with the objective of minimizing the potential risk of principal loss. The fair value of our securities varies from period to period due to changes in interest rates, in the performance of the underlying collateral and in the credit performance of the underlying issuer, among other factors. The Company does not intend to sell the securities that have an unrealized loss shown in the table above, and it is not more likely than not that the Company will be required to sell a security before recovery of its amortized cost basis, which may be maturity.

 

The Company recognizes the credit component of other-than-temporary impairments of debt securities in "Other Income" and the noncredit component in "Other comprehensive income (loss)" for those securities that we do not intend to sell and for which it is not more likely than not that we will be required to sell before recovery.  During 2017 and 2016, the Company did not record any material impairment charges on its outstanding securities.

 

The amortized cost and fair value of the securities at an unrealized loss position at December 30, 2017 were $1,348,777 and $1,323,807 respectively. Approximately 80% of securities in our portfolio were at an unrealized loss position at December 30, 2017. We have the ability to hold these securities until maturity or their value is recovered. We do not consider these unrealized losses to be other than temporary credit losses because there has been no material deterioration in credit quality and no change in the cash flows of the underlying securities. We do not intend to sell the securities and it is not more likely than not that we will be required to sell the securities; therefore, no material impairment has been recorded in the accompanying condensed consolidated statement of income.

 

The cost of securities sold is based on the specific identification method.

 

The following tables display additional information regarding gross unrealized losses and fair value by major security type for available-for-sale securities in an unrealized loss position as of December 30, 2017 and December 31, 2016.

 

    As of December 30, 2017  
    Less than 12 Consecutive Months     12 Consecutive Months or Longer  
                         
    Gross Unrealized
Losses
    Fair Value     Gross Unrealized
Losses
    Fair Value  
U.S. Treasury securities   $ (111 )   $ 12,966     $ (143 )   $ 6,371  
Agency securities     (168 )     16,097       (663 )     25,972  
Mortgage-backed securities     (503 )     19,628       (5,365 )     153,835  
Corporate securities     (4,562 )     439,174       (9,228 )     347,052  
Municipal securities     (1,027 )     125,819       (977 )     38,167  
Other     (2,219 )     136,147       (4 )     2,579  
Total   $ (8,590 )   $ 749,831     $ (16,380 )   $ 573,976  

 

    As of December 31, 2016  
    Less than 12 Consecutive Months     12 Consecutive Months or Longer  
                         
    Gross Unrealized
Losses
    Fair Value     Gross Unrealized
Losses
    Fair Value  
U.S. Treasury securities   $ (288 )   $ 24,260     $ -     $ -  
Agency securities     (991 )     49,255       -       -  
Mortgage-backed securities     (3,702 )     159,665       (1,870 )     64,645  
Corporate securities     (18,856 )     765,712       (1,699 )     40,910  
Municipal securities     (2,762 )     130,994       (97 )     6,326  
Other     (3 )     4,058       (6 )     6,919  
Total   $ (26,602 )   $ 1,133,944     $ (3,672 )   $ 118,800  

 

The amortized cost and fair value of marketable securities at December 30, 2017, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.

 

    Amortized Cost     Fair Value  
             
Due in one year or less   $ 162,045     $ 161,687  
Due after one year through five years     1,108,172       1,089,840  
Due after five years through ten years     160,967       155,354  
Due after ten years     15,244       14,839  
    $ 1,446,428     $ 1,421,720  
Commitments and Contingencies
12 Months Ended
Dec. 30, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

4. Commitments and Contingencies

 

Commitments

 

Rental expense related to office, equipment, warehouse space, and real estate amounted to $18,915, $19,657, and $18,104 for the years ended December 30, 2017, December 31, 2016, and December 26, 2015, respectively. The Company recognizes rental expense on a straight-line basis over the lease term.

 

Future minimum lease payments are as follows:

 

Year   Amount  
2018   $ 17,572  
2019     14,179  
2020     11,598  
2021     9,478  
2022     7,777  
Thereafter     21,606  
Total   $ 82,210  

 

Certain cash balances, primarily of GEL and GC, are held as collateral by banks securing payment of local value-added tax requirements.  The total amount of restricted cash balances were $271 and $113 at December 30, 2017 and December 31, 2016, respectively.

 

The Company is party to certain commitments, which include purchases of raw materials, advertising expenditures, and other indirect purchases in connection with conducting our business. The aggregate amount of purchase orders and other commitments open as of December 30, 2017 was approximately $313,385. We cannot determine the aggregate amount of such purchase orders that represent contractual obligations because purchase orders may represent authorizations to purchase rather than binding agreements. Our purchase orders are based on our current needs and are fulfilled by our suppliers, contract manufacturers, and logistics providers within short periods of time.

 

Contingencies

 

In the normal course of business, the Company and its subsidiaries are parties to various legal claims, investigations and complaints, including matters alleging patent infringement and other intellectual property claims. The Company evaluates, on a quarterly and annual basis, developments in legal proceedings, investigations, claims, and other loss contingencies that could affect any required accrual or disclosure or estimate of reasonably possible loss or range of loss. An estimated loss from a loss contingency is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. If a range of loss is estimated, and some amount within that range appears to be a better estimate than any other amount within that range, then that amount is accrued. If no amount within the range can be identified as a better estimate than any other amount, the Company accrues the minimum amount in the range.

 

If an outcome unfavorable to the Company is determined to be probable, but the amount of loss cannot be reasonably estimated or is determined to be reasonably possible, but not probable, we disclose the nature of the contingency and an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. The Company’s aggregate range of reasonably possible losses includes (1) matters where a liability has been accrued and there is a reasonably possible loss in excess of the amount accrued for that liability, and (2) matters where a loss is believed to be reasonably possible, but not probable, and a liability therefore has not been accrued. This aggregate range only represents the Company’s estimate of reasonably possible losses and does not represent the Company’s maximum loss exposure. The assessment regarding whether a loss is probable or reasonably possible, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. In assessing the probability of an outcome in a lawsuit, claim or assessment that could be unfavorable to the Company, we consider the following factors, among others: a) the nature of the litigation, claim, or assessment; b) the progress of the case; c) the opinions or views of legal counsel and other advisers; d) our experience in similar cases; e) the experience of other entities in similar cases; and f) how we intend to respond to the lawsuit, claim, or assessment. Costs incurred in defending lawsuits, claims or assessments are expensed as incurred.

 

Management of the Company currently does not believe it is reasonably possible that the Company may have incurred a material loss, or a material loss in excess of recorded accruals, with respect to loss contingencies in the aggregate, for the fiscal year ended December 30, 2017. The results of legal proceedings, investigations and claims, however, cannot be predicted with certainty. An adverse resolution of one or more of such matters in excess of management’s expectations could have a material adverse effect in the particular quarter or fiscal year in which a loss is recorded, but based on information currently known, the Company does not believe it is likely that losses from such matters would have a material adverse effect on the Company’s business or its consolidated financial position, results of operations or cash flows.

 

On January 24, 2018, Garmin and Navico agreed on a global settlement of all pending litigation between them, pursuant to which it is expected that all related claims will be dismissed with prejudice or terminated, including those for which the Company had previously disclosed a reasonably possible loss. The settlement is not material to the Company’s financial condition or results of operations. The parties have agreed to keep the terms of the settlement confidential. The Company also settled or resolved certain other matters during the fiscal year ended December 30, 2017 that did not individually or in the aggregate have a material impact on the Company’s business or its consolidated financial position, results of operations or cash flows. 

Employee Benefit Plans
12 Months Ended
Dec. 30, 2017
Retirement Benefits [Abstract]  
Employee Benefit Plans

5. Employee Benefit Plans

 

GII and the Company’s other U.S.-based subsidiaries sponsor a defined contribution employee retirement plan under which their employees may contribute up to 50% of their annual compensation subject to Internal Revenue Code maximum limitations and to which the subsidiaries contribute a specified percentage of each participant’s annual compensation up to certain limits as defined in the retirement plan. Additionally, GEL has a defined contribution plan under which its employees may contribute up to 7.5% of their annual compensation. During the years ended December 30, 2017, December 31, 2016, and December 26, 2015, expense related to these and other defined contribution plans of $43,826, $40,844, and $37,489, respectively, was charged to operations.

 

Certain of the Company’s foreign subsidiaries participate in local defined benefit pension plans. Contributions are calculated by formulas that consider final pensionable salaries. Neither obligations nor contributions for the years ended December 30, 2017, December 31, 2016, and December 26, 2015 were significant.

Income Taxes
12 Months Ended
Dec. 30, 2017
Income Tax Disclosure [Abstract]  
Income Taxes

6. Income Taxes

 

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

 

    Fiscal Year Ended  
    December 30,     December 31,     December 26,  
    2017     2016     2015  
Federal:                        
Current   $ 31,343     $ 66,627     $ 49,138  
Deferred     50,936       5,343       4,216  
    $ 82,279     $ 71,970     $ 53,354  
State:                        
Current     4,203       8,809       9,354  
Deferred     11,712       (3,823 )     (5,858 )
    $ 15,915     $ 4,986     $ 3,496  
Foreign:                        
Current     43,688       42,406       55,730  
Deferred     (154,543 )     (506 )     (1,620 )
    $ (110,855 )   $ 41,900     $ 54,110  
Total   $ (12,661 )   $ 118,856     $ 110,960  

 

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

 

    Fiscal Year Ended  
    December 30,     December 31,     December 26,  
    2017     2016     2015  
Federal income tax expense at U.S. statutory rate   $ 238,803     $ 220,385     $ 198,516  
State income tax expense, net of federal tax effect     5,977       2,749       1,931  
Foreign tax rate differential     (102,316 )     (111,989 )     (100,010 )
Other foreign taxes less incentives and credits     (4,646 )     (16,593 )     (8,592 )
Withholding Tax     14,632       17,447       16,969  
Net Change in Uncertain Tax Positions     5,363       17,328       21,246  
Federal Domestic Production Activities Deduction     (3,895 )     (5,528 )     (4,589 )
Federal Research and Development Credit     (10,851 )     (8,548 )     (8,573 )
Switzerland Corporate Tax Election     (180,034 )     -       -  
Share Based Compensation     19,916       -       -  
Other, net     4,390       3,605       (5,938 )
Income tax expense   $ (12,661 )   $ 118,856     $ 110,960  

 

In the year ended December 30, 2017, the Company recorded an income tax benefit of $180,034 as a result of the Company’s February 2017 election to align certain Switzerland corporate tax positions with evolving international tax initiatives.

 

The Company’s statutory federal income tax rate in Switzerland, the Company's place of incorporation since the Redomestication, effective June 27, 2010, is 7.83%. If the Company reconciled taxes at the Swiss holding company federal statutory tax rate to the reported income tax for 2017 as presented above, the amounts related to tax at the statutory rate would be approximately $186,000 lower, or $53,600, and the foreign tax rate differential would be adjusted by a similar amount to approximately $77,000. For 2016, the amounts related to tax at the statutory rate would be approximately $171,000 lower, or $49,000, and the foreign tax rate differential would be adjusted by a similar amount to approximately $55,000. For 2015, the amount related to tax at the statutory rate would be approximately $154,000 lower, or $44,000, and the foreign tax differential would be reduced by a similar amount to approximately $52,000. All other amounts would remain substantially unchanged.

 

The Company’s income before income taxes attributable to non-U.S. operations was $461,436, $453,729, and $403,242, for the years ended December 30, 2017, December 31, 2016, and December 26, 2015, respectively.

 

Income taxes of $20,287, $22,139, and $21,085 at December 30, 2017, December 31, 2016, and December 26, 2015, respectively, have not been accrued by the Company for the unremitted earnings of several of its foreign subsidiaries because such earnings are intended to be reinvested in the subsidiaries indefinitely.

 

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

 

    December 30,     December 31,  
    2017     2016  
Deferred tax assets:                
Product warranty accruals   $ 2,202     $ 2,768  
Allowance for doubtful accounts     5,129       10,100  
Inventory reserves     6,920       8,953  
Sales program allowances     910       1,397  
Reserve for sales returns     816       2,196  
Other accruals     10,722       13,548  
Share based compensation     6,261       29,632  
Tax credit carryforwards     8,413       5,012  
Amortization     165,162       15,368  
Deferred Revenue     4,690       32,487  
Net operating losses of subsidiaries     8,799       5,403  
Benefit related to uncertain tax positions     5,383       7,542  
Other     3,677       4,005  
Valuation allowance related to loss carryforward and tax credits     (7,267 )     (4,622 )
    $ 221,817     $ 133,789  
Deferred tax liabilities:                
Depreciation     11,674       17,854  
Prepaid Expenses     3,147       2,876  
Book basis in excess of tax basis for acquired entities     17,364       3,865  
Withholding tax     60,555       58,597  
Other     4,950       1,523  
      97,690       84,715  
Net deferred tax assets   $ 124,127     $ 49,074  

 

At December 30, 2017, the Company had $8,413 of tax credit carryover compared to $5,012 at December 31, 2016.

 

At December 30, 2017, the Company had a deferred tax asset of $8,799 related to the future tax benefit on net operating loss (NOL) carryforwards of $70,419. Included in the NOL carryforwards is $43,210 that relates to Switzerland and expires in varying amounts between 2023 and 2024, $1,757 that relates to Finland and expires in varying amounts between 2025 and 2027, $10,610 that relates to the United States and various state jurisdictions and expires in varying amounts between 2022 and 2037, $5,234 that relates to the Netherlands and expires in 2026 and $9,608 that relates to various other jurisdictions and has no expiration date. The Company has recorded a valuation allowance for a portion of its deferred tax asset relating to various tax attributes that it does not believe are more likely than not to be realized. In the future, if the Company determines, based on existence of sufficient evidence, that it should realize more or less of its deferred tax assets, an adjustment to the valuation allowance will be made in the period such a determination is made.

 

On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law in the United States. The new tax legislation contains several provisions that will impact the Company, including the reduction of the corporate income tax rate from 35% to 21%, acceleration of business asset expensing, and a reduction in the amount of executive pay that may qualify as a tax deduction, among others. The decrease in the corporate income tax rate will require the Company to remeasure its U.S. deferred tax assets and liabilities, as well as reassess the realizability of its deferred tax assets and liabilities. FASB ASC 740 requires the recognition of the effects of tax law changes in the period of enactment. However, due to the complexities of the new tax legislation, the SEC has issued SAB 118 which allows for the recognition of provisional amounts during a measurement period similar to the measurement period used when accounting for business combinations. The Company has recorded a provisional re-measurement of its deferred tax assets and liabilities, resulting in an immaterial impact on its 2017 income tax provision. The Company will continue to assess the impact of the new tax legislation, as well as any related future regulations and rules, and will record any additional impacts as identified during the measurement period, if necessary. The Company does not expect any such potential adjustments in the future periods will materially impact the Company’s financial condition or result of operations.

 

The total amount of gross unrecognized tax benefits as of December 30, 2017 was $130,798. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for years ended December 30, 2017, December 31, 2016, and December 26, 2015 is as follows:

 

    December 30,     December 31,     December 26,  
    2017     2016     2015  
Balance beginning of year   $ 115,090     $ 97,904     $ 77,495  
Additions based on tax positions related to prior years     8,564       489       89  
Reductions based on tax positions related to prior years     (983 )     (940 )     (1,671 )
Additions based on tax positions related to current period     26,295       28,859       29,019  
Reductions related to settlements with tax authorities     -       (134 )     (364 )
Expiration of statute of limitations     (18,168 )     (11,088 )     (6,664 )
Balance at end of year   $ 130,798     $ 115,090     $ 97,904  

 

Accounting guidance requires unrecognized tax benefits to be classified as noncurrent liabilities, except for the portion that is expected to be paid within one year of the balance sheet date. The entire balance of net unrecognized benefits of $127,306, $109,667 and $93,654 are required to be classified as noncurrent at December 30, 2017, December 31, 2016, and December 26, 2015, respectively. The net unrecognized tax benefits, if recognized, would reduce the effective tax rate. None of the unrecognized tax benefits are due to uncertainty in the timing of deductibility.

 

Interest and penalties, if any, accrued on the unrecognized tax benefits are reflected in income tax expense. At December 30, 2017, December 31, 2016, and December 26, 2015, the Company had accrued approximately $5,605, $3,901, and $2,479, respectively, for interest. The interest component of the reserve increased income tax expense for the years ending December 30, 2017, December 31, 2016, and December 26, 2015, by $1,704, $1,422, and $320 respectively. The Company did not have significant amounts accrued for penalties for the years ending December 30, 2017, December 31, 2016, and December 26, 2015.

 

The Company files income tax returns in Switzerland, U.S. federal jurisdiction, as well as various states, local, and foreign jurisdictions. In its major tax jurisdictions, Switzerland, Taiwan, United Kingdom, and U.S. federal and various states, the Company is no longer subject to income tax examinations by tax authorities, with few exceptions, for years prior to 2013, 2012, 2015, and 2014, respectively.

 

The Company recognized a reduction of income tax expense of $17,918, $11,151, and $6,971 in fiscal years ended December 30, 2017, December 31, 2016, and December 26, 2015, respectively, to reflect the expiration of statutes of limitations and releases due to audit settlement in various jurisdictions.

 

The Company believes that it is reasonably possible that approximately $20,000 to $25,000 of its reserves for certain unrecognized tax benefits will decrease within the next 12 months as the result of the expiration of statutes of limitations. This potential decrease in unrecognized tax benefits would impact the Company’s effective tax rate within the next 12 months.

Fair Value of Financial Instruments
12 Months Ended
Dec. 30, 2017
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

7. Fair Value of Financial Instruments

 

As required by the Financial Instruments topic of the FASB ASC, the following summarizes required information about the fair value of certain financial instruments for which it is currently practicable to estimate such value. None of the financial instruments are held or issued for trading purposes. The carrying amounts and fair values of the Company’s financial instruments are as follows:

 

    December 30, 2017     December 31, 2016  
    Carrying     Fair     Carrying     Fair  
    Amount     Value     Amount     Value  
Cash and cash equivalents   $ 891,488     $ 891,488     $ 846,883     $ 846,883  
Restricted cash   $ 271     $ 271     $ 113     $ 113  
Marketable securities   $ 1,421,720     $ 1,421,720     $ 1,480,237     $ 1,480,237  

 

For certain of the Company’s financial instruments, including accounts receivable, loan receivable, accounts payable and other accrued liabilities, the carrying amounts approximate fair value due to their short maturities.

Segment Information
12 Months Ended
Dec. 30, 2017
Segment Reporting [Abstract]  
Segment Information

8. Segment Information

 

The Company has identified five reportable segments for external reporting purposes – auto, aviation, marine, outdoor and fitness. There are two operating segments (auto PND and auto OEM) that are not reported separately but aggregated within the auto reportable segment. Each operating segment is individually reviewed and evaluated by the Chief Operating Decision Maker (CODM), who allocates resources and assesses performance of each segment individually.

 

All of the Company’s reportable segments offer products through the Company’s network of independent dealers and distributors as well as through OEMs. However, the nature of products and types of customers for the five reportable segments vary. The Company’s marine, auto, outdoor, and fitness segments include portable global positioning system (GPS) receivers and accessories sold primarily to retail outlets. These products are produced primarily by the Company’s subsidiary in Taiwan. The Company’s aviation products are portable and panel mount avionics for Visual Flight Rules and Instrument Flight Rules navigation and are sold primarily to aviation dealers and certain aircraft manufacturers.

 

The Company’s Chief Executive Officer has been identified as the CODM. The CODM uses operating income as the measure of profit or loss to assess segment performance and allocate resources. Operating income represents net sales less costs of goods sold and operating expenses, including certain allocated general and administrative costs. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. There are no inter-segment sales or transfers.

 

The Company’s reportable segments share many common resources, infrastructures and assets in the normal course of business. Thus, the Company does not report accounts receivable, inventories, property and equipment, intangible assets, or capital expenditures by segment to the CODM.

 

Revenues, gross profit, and operating income for each of the Company’s reportable segments are presented below. In 2016 the Company moved action camera related revenue and expenses from the outdoor segment to the auto segment, allowing for alignment and synergies with other camera-based efforts occurring within the auto segment. The overall impact of the move was immaterial. However, action camera related operating results for the 52-weeks ended December 26, 2015 has been recast to conform to the 2017 and 2016 presentation.

 

    Reportable Segments  
                                     
52-Weeks Ended December 30, 2017   Outdoor     Fitness     Marine     Auto     Aviation     Total  
                                     
Net sales   $ 698,867     $ 762,194     $ 374,001     $ 750,583     $ 501,359     $ 3,087,004  
Gross profit     448,410       422,636       212,592       327,921       371,605       1,783,164  
Operating income     249,867       146,765       50,328       67,967       153,933       668,860  

 

53-Weeks Ended December 31, 2016                                    
                                     
Net sales   $ 546,326     $ 818,486     $ 331,947     $ 882,558     $ 439,348     $ 3,018,665  
Gross profit     340,504       437,205       183,709       388,747       329,405       1,679,570  
Operating income     184,035       160,596       52,167       102,347       124,764       623,909  

 

52-Weeks Ended December 26, 2015                                    
                                     
Net sales   $ 411,184     $ 661,599     $ 286,778     $ 1,062,091     $ 398,618     $ 2,820,270  
Gross profit     254,878       366,139       158,493       464,480       294,714       1,538,704  
Operating income     139,070       134,574       28,611       136,069       111,257       549,581  

 

Net sales, long-lived assets (property and equipment), and net assets by geographic area are as shown below for the years ended December 30, 2017, December 31, 2016, and December 26, 2015. Note that APAC refers to the Asia Pacific region, and EMEA includes Europe, the Middle East and Africa.

 

    Americas     APAC     EMEA     Total  
December 30, 2017                                
Net sales to external customers (1)   $ 1,475,661     $ 436,188     $ 1,175,155     $ 3,087,004  
Property and equipment, net     381,974       173,392       40,318       595,684  
Net assets (2)     2,325,569       982,898       493,999       3,802,466  
                                 
December 31, 2016                                
Net sales to external customers (1)   $ 1,518,934     $ 386,549     $ 1,113,182     $ 3,018,665  
Property and equipment, net     300,158       144,470       38,250       482,878  
Net assets (2)     2,153,161       933,999       330,843       3,418,003  
                                 
December 26, 2015                                
Net sales to external customers (1)   $ 1,469,243     $ 337,888     $ 1,013,139     $ 2,820,270  
Property and equipment, net     294,234       111,700       40,154       446,089  
Net assets (2)     2,110,108