What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-29 compared with 2025-07-30 · 106 added, 109 removed, 168 unchanged (56% of the section changed)

20 unchanged sentences

Foreign currency fluctuations and rapidly changing global trade policies, particularly those affecting the United States, increase the economic and operational uncertainties that could significantly harm our business and results of operations.

During the 26-week period ended June 28, 2025, net sales in the United States of imported fitness, outdoor, and marine products represented approximately 25% of total net sales.

Refer to Part II, Item 1A, “Risk Factors” of this Quarterly Report for further discussion of the risks and uncertainties facing our Company.

On July 4, 2025, the United States enacted new tax legislation.

The effects of the new United States tax legislation are not included in the Company's results for the 26-week period ended June 28, 2025 as the enactment date occurred after the end of the period.

Certain provisions of the new United States tax legislation are effective for the 2025 tax year, while other provisions become effective in future years.

We are currently evaluating the full effects of the new United States tax legislation.

We currently estimate that the provisions effective for the 2025 tax year will result in a decrease in our originally anticipated cash outlays for income taxes in 2025, primarily due to the change in capitalization requirements of certain research and development costs, however, we estimate an increase to our full-year effective tax rate by approximately 100 basis points due to a decrease in U.S.

tax deductions and credits.

Results of Operations

The following tables and discussion provides an analysis of our results of operations for the second quarter of 2025 compared to the second quarter of 2024.

Comparison of 13-Weeks Ended June 28, 2025 and June 29, 2024

The following tables and discussion provides an analysis of our results of operations for the third quarter of 2025 compared to the third quarter of 2024.

Comparison of 13-Weeks Ended September 27, 2025 and September 28, 2024

13-Weeks Ended

June 28, 2025

September 27, 2025

Year-over-Year Change

13-Weeks Ended

June 29, 2024

September 28, 2024

Percentage of Total Net Sales

3 unchanged sentences

Percentage of Total Net Sales

Net sales increased 20% for the 13-week period ended June 28, 2025 when compared to the year-ago quarter.

Total unit sales in the second quarter of 2025 increased to 5,203 when compared to total unit sales of 4,655 in the second quarter of 2024, which differs from the percent increase in revenue primarily due to shifts in segment and product mix.

Fitness was the largest portion of our revenue mix in the second quarter of 2025 at 33%, while Outdoor was the largest portion of our revenue mix in the second quarter of 2024 at 29%.

Net sales increased 12% for the 13-week period ended September 27, 2025 when compared to the year-ago quarter.

Total unit sales in the third quarter of 2025 increased by approximately 8% to 4,982 when compared to total unit sales of 4,620 in the third quarter of 2024, which differs from the percent increase in revenue primarily due to shifts in segment and product mix.

Fitness was the largest portion of our revenue mix in the third quarter of 2025 at 34%, while outdoor was the largest portion of our revenue mix in the third quarter of 2024 at 33%.

The increase in fitness revenue was driven by strong demand for advanced wearables.

Outdoor revenue increased primarily due to sales growth in adventure watches.

The increase in aviation revenue was driven by sales growth in OEM and aftermarket product categories.

The increase in marine revenue was driven by sales growth across multiple product categories, led by chartplotters.

Auto OEM revenue increased primarily due to growth in domain controllers.

The increase in marine revenue was driven by sales growth across multiple product categories.

Outdoor revenue decreased primarily due to consumer auto and adventure watch product categories comparing against strong prior year product launch cycles.

Auto OEM revenue decreased as certain legacy programs approach end-of-life and were partially offset by growth in a recent domain controller program.

13-Weeks Ended

June 28, 2025

September 27, 2025

Year-over-Year Change

13-Weeks Ended

June 29, 2024

September 28, 2024

Percentage of Segment Net Sales

4 unchanged sentences

Percentage of Total Net Sales

Gross profit dollars in the second quarter of 2025 increased 24%, primarily due to the increase in net sales when compared to the year-ago quarter, as described above.

Consolidated gross margin increased 150 basis points when compared to the year-ago quarter due to higher margins across all segments, driven primarily by fitness and outdoor.

The fitness and outdoor gross margin increases of 300 basis points and 160 basis points, respectively, were primarily attributable to favorable product mix.

Gross margin remained relatively flat within the aviation, marine, and auto OEM segments when compared to the year-ago quarter.

Gross profit dollars in the third quarter of 2025 increased 10%, primarily due to the increase in net sales when compared to the year-ago quarter, as described above.

Consolidated gross margin as a percent of net sales decreased 90 basis points when compared to the year-ago quarter, primarily due to higher product costs.

Gross margin percentage remained relatively flat within the fitness, aviation, and marine segments when compared to the year-ago quarter.

The outdoor gross margin percentage decrease of 190 basis points was primarily attributable to higher product costs.

The auto OEM gross margin percentage decrease of 440 basis points was primarily attributable to an increase in accrued warranty costs associated with prior period sales.

Operating Expense

1 unchanged sentence

13-Weeks Ended

June 28, 2025

September 27, 2025

Year-over-Year Change

13-Weeks Ended

June 29, 2024

September 28, 2024

Research and development expense

3 unchanged sentences

Percentage of Total Net Sales

Total operating expense in the second quarter of 2025 increased 14% in absolute dollars and decreased 180 basis points as a percent of revenue when compared to the year-ago quarter.

Operating expense, as a percent of segment net sales, decreased in the fitness, aviation and auto OEM segments by 450 basis points, 180 basis points, and 220 basis points, respectively, when compared to the year-ago quarter due to increased sales and greater leverage of expenses.

Operating expense, as a percent of segment net sales, increased by 170 basis points in the marine segment and remained relatively flat in the outdoor segment when compared to the year-ago quarter.

Total operating expense in the third quarter of 2025 increased 15% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago quarter.

Operating expense, as a percent of segment net sales, decreased in the fitness, aviation, and marine segments by 110 basis points, 380 basis points, and 100 basis points, respectively, when compared to the year-ago quarter due to increased sales and greater leverage of expenses.

Operating expense, as a percent of segment net sales, increased in the outdoor and auto OEM segments by 370 basis points and 490 basis points, respectively, when compared to the year-ago quarter due to decreased sales while expenses increased.

Research and development expense increased 15% in absolute dollars when compared to the year-ago quarter.

1 unchanged sentence

Selling, general and administrative expenses increased 14% in absolute dollars when compared to the year-ago quarter.

The absolute dollar expense increase was primarily attributable to increased personnel-related expenses.

The absolute dollar expense increase was primarily due to higher personnel-related expenses.

Operating Income

1 unchanged sentence

13-Weeks Ended

June 28, 2025

September 27, 2025

Year-over-Year Change

13-Weeks Ended

June 29, 2024

September 28, 2024

Percentage of Segment Net Sales

5 unchanged sentences

NM - Represents that the percentage change is not meaningful.

Total operating income in the second quarter of 2025 increased 38% in absolute dollars and increased 330 basis points as a percent of revenue when compared to the year-ago quarter.

The increase in operating income was driven by increased sales, increased gross margin as a percent of revenue, and lower operating expenses as a percent of revenue, as described above.

Operating performance improved across all segments.

Total operating income in the third quarter of 2025 increased 4% in absolute dollars and decreased 180 basis points as a percent of revenue when compared to the year-ago quarter.

The improved operating income dollar performance in fitness, aviation, and marine was partially offset by decreases in outdoor and auto OEM.

Other Income (Expense)

1 unchanged sentence

13-Weeks Ended

June 28, 2025

September 27, 2025

13-Weeks Ended

June 29, 2024

September 28, 2024

Interest income

Foreign currency (losses) gains

Other (expense) income

The average interest rate return on cash and investments during the second quarter of 2025 was 3.2%, compared to 3.4% during the same quarter of 2024.

Foreign currency gains

The average interest rate return on cash and investments during the third quarter of 2025 was 3.3%, and remained relatively flat compared to 3.3% during the same quarter of 2024.

Foreign currency gains and losses for the Company are driven by movements of a number of currencies in relation to the U.S.

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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.

The $23.5 million currency loss recognized in the second quarter of 2025 was primarily due to the U.S.

Dollar weakening against the Taiwan Dollar, partially offset by the U.S.

Dollar weakening against the Euro and British Pound Sterling, within the 13-week period ended June 28, 2025.

The $20.3 million currency gain recognized in the third quarter of 2025 was primarily due to the U.S.

Dollar strengthening against the Taiwan Dollar, partially offset by the U.S.

Dollar strengthening against the Euro, Polish Zloty, and British Pound Sterling, within the 13-week period ended September 27, 2025.

During this period, the U.S.

Dollar weakened 14.1% against the Taiwan Dollar, resulting in a loss of $67.7 million, while the U.S.

Dollar weakened 8.2% against the Euro and 6.0% against the British Pound Sterling, resulting in gains of $36.5 million and $2.9 million, respectively.

Dollar strengthened 4.5% against the Taiwan Dollar, resulting in a gain of $26.5 million, while the U.S.

Dollar strengthened 0.2% against the Euro, 1.0% against the Polish Zloty, and 2.3% against the British Pound Sterling, resulting in losses of $2.6 million, $2.2 million, and $1.6 million, respectively.

The remaining net currency gain of $0.2 million was related to the impacts of other currencies, each of which was individually immaterial.

The $4.8 million currency loss recognized in the second quarter of 2024 was primarily due to the U.S.

Dollar strengthening against the Euro and Polish Zloty, offset by the U.S.

Dollar strengthening against the Taiwan Dollar, within the 13-week period ended June 29, 2024.

The $18.1 million currency gain recognized in the third quarter of 2024 was primarily due to the U.S.

Dollar weakening against the British Pound Sterling, Euro, and Polish Zloty, partially offset by the U.S.

Dollar weakening against the Taiwan Dollar, within the 13-week period ended September 28, 2024.

During this period, the U.S.

Dollar strengthened 0.7% against the Euro and 0.8% against the Polish Zloty, resulting in losses of $3.3 million and $1.7 million, respectively, while the U.S.

Dollar strengthened 1.7% against the Taiwan Dollar, resulting in a gain of $8.4 million.

The remaining net currency loss of $8.2 million was related to the impacts of other drivers, each of which was individually immaterial.

Dollar weakened 3.7% against the British Pound Sterling, 4.2% against the Euro, and 5.3% against the Polish Zloty, resulting in gains of $3.2 million, $8.9 million, and $9.3 million, respectively, while the U.S.

Dollar weakened 2.9% against the Taiwan Dollar, resulting in a loss of $10.4 million.

The remaining net currency gain of $7.1 million was related to the impacts of other currencies, each of which was individually immaterial.

Income Tax Provision

The Company recorded income tax expense of $79.4 million in the 13-week period ended June 28, 2025, compared to income tax expense of $65.3 million in the 13-week period ended June 29, 2024.

The effective tax rate was 16.5% in the second quarter of 2025, compared to 17.9% in the second quarter of 2024.

The decrease in effective tax rate between comparative periods was primarily due to increased releases of uncertain tax position reserves.

As a result of the above, net income for the 13-week period ended June 28, 2025 was $400.8 million compared to $300.6 million for the 13-week period ended June 29, 2024, an increase of $100.2 million.

Comparison of 26-Weeks Ended June 28, 2025 and June 29, 2024

The Company recorded income tax expense of $108.2 million in the 13-week period ended September 27, 2025, compared to income tax expense of $87.1 million in the 13-week period ended September 28, 2024.

The effective tax rate was 21.2% in the third quarter of 2025, compared to 17.9% in the third quarter of 2024.

The increase in the effective tax rate in the current quarter was primarily driven by the U.S.

tax legislation enacted during the current quarter, which, among other things, changed capitalization requirements of certain research and development costs, resulting in a year-to-date adjustment due to a decrease in certain expected U.S.

tax deductions and credits.

As a result of the above, net income for the 13-week period ended September 27, 2025 was $401.6 million compared to $399.1 million for the 13-week period ended September 28, 2024, an increase of $2.5 million.

Comparison of 39-Weeks Ended September 27, 2025 and September 28, 2024

39-Weeks Ended

June 28, 2025

September 27, 2025

Year-over-Year Change

39-Weeks Ended

June 29, 2024

September 28, 2024

Percentage of Total Net Sales

3 unchanged sentences

Percentage of Total Net Sales

Net sales increased 16% for the 26-week period ended June 28, 2025 when compared to the year-ago period.

Total unit sales in the first half of 2025 increased to 9,565 when compared to total unit sales of 8,545 in the first half of 2024, which differs from the percent increase in revenue primarily due to shifts in segment and product mix.

Fitness was the largest portion of our revenue mix in the first half of 2025 at 30%, while outdoor was the largest portion of our revenue mix in the first half of 2024 at 28%.

Net sales increased 14% for the 39-week period ended September 27, 2025 when compared to the year-ago period.

Total unit sales in the first three quarters of 2025 increased by approximately 10% to 14,547 when compared to total unit sales of 13,165 in the first three quarters of 2024, which differs from the percent increase in revenue primarily due to shifts in segment and product mix.

Fitness was the largest portion of our revenue mix in the first three quarters of 2025 at 31%, while outdoor was the largest portion of our revenue mix in the first three quarters of 2024 at 30%.

The increase in fitness revenue was driven by strong demand for advanced wearables.

4 unchanged sentences

39-Weeks Ended

June 28, 2025

September 27, 2025

Year-over-Year Change

39-Weeks Ended

June 29, 2024

September 28, 2024

Percentage of Segment Net Sales

4 unchanged sentences

Percentage of Total Net Sales

Gross profit dollars in the first half of 2025 increased 17%, primarily due to the increase in net sales when compared to the year-ago period, as described above.

Consolidated gross margin as a percent of net sales was relatively flat when compared to the year-ago period, as the increases in fitness and marine gross margins were partially offset by unfavorable changes in segment mix.

The fitness and marine gross margin increases of 200 and 180 basis points, respectively, were primarily attributable to favorable product mix and lower costs of goods.

The outdoor, aviation, and auto OEM gross margins were relatively flat when compared to the year-ago period.

Gross profit dollars in the first three quarters of 2025 increased 15%, primarily due to the increase in net sales when compared to the year-ago period, as described above.

Consolidated gross margin as a percent of net sales was relatively flat when compared to the year-ago period.

The marine gross margin percentage increase of 140 basis points was primarily attributable to favorable product mix.

The fitness, outdoor, and aviation gross margin percentages were relatively flat when compared to the year-ago period.

The auto OEM gross margin percentage decrease of 150 basis points was primarily attributable to an increase in accrued warranty costs associated with prior period sales.

Operating Expense

1 unchanged sentence

39-Weeks Ended

June 28, 2025

September 27, 2025

Year-over-Year Change

39-Weeks Ended

June 29, 2024

September 28, 2024

Research and development expense

3 unchanged sentences

Percentage of Total Net Sales

Total operating expense in the first half of 2025 increased 12% in absolute dollars and decreased 130 basis points as a percent of revenue when compared to the year-ago period.

Operating expense, as a percent of segment net sales, decreased in the fitness and auto OEM segments when compared to the year-ago period by 300 basis points and 460 basis points, respectively, due to the increase in sales and greater leverage of expenses.

Operating expense, as a percent of segment net sales, increased in the marine segment by 220 basis points and remained relatively flat in the outdoor and aviation segments when compared to the year-ago period.

Total operating expense in the first three quarters of 2025 increased 13% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago period.

Operating expense, as a percent of segment net sales, decreased in the fitness, aviation, and auto OEM segments when compared to the year-ago period by 230 basis points, 110 basis points, and 110 basis points, respectively, due to the increase in sales and greater leverage of expenses.

Operating expense, as a percent of segment net sales, increased in the outdoor and marine segments by 110 basis points and 140 basis points, respectively, when compared to the year-ago period due to expenses growing more than sales.

Research and development expense increased 13% in absolute dollars when compared to the year-ago period.

1 unchanged sentence

Selling, general and administrative expense increased 13% in absolute dollars when compared to the year-ago period.

The absolute dollar expense increase was primarily attributable to increased personnel-related expenses.

The absolute dollar expense increase was primarily due to higher personnel-related expenses.

Operating Income

1 unchanged sentence

39-Weeks Ended

June 28, 2025

September 27, 2025

Year-over-Year Change

39-Weeks Ended

June 29, 2024

September 28, 2024

Percentage of Segment Net Sales

5 unchanged sentences

NM - Represents that the percentage change is not meaningful.

Total operating income in the first half of 2025 increased 26% in absolute dollars and 190 basis points as a percent of revenue when compared to the year-ago period.

The increase as a percent of revenue was primarily due to increased sales, increased gross margin as a percent of revenue, and lower operating expenses as a percent of revenue, as described above.

Operating performance improved across all segments.

Total operating income in the first three quarters of 2025 increased 17% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago period.

The improved operating income dollar performance in fitness, outdoor, aviation, and marine was partially offset by a decrease in auto OEM.

Other Income (Expense)

1 unchanged sentence

39-Weeks Ended

June 28, 2025

September 27, 2025

39-Weeks Ended

June 29, 2024

September 28, 2024

Interest income

Foreign currency gains (losses)

The average interest returns on cash and investments during the 26-week period ended June 28, 2025 and June 29, 2024 were 3.2% and 3.3%, respectively.

Foreign currency gains

The average interest returns on cash and investments during the 39-week periods ended September 27, 2025 and September 28, 2024 were 3.2% and 3.3%, respectively.

Foreign currency gains and losses for the Company are driven by movements of a number of currencies in relation to the U.S.

3 unchanged sentences

The $1.2 million currency gain recognized in the 26-week period ended June 28, 2025 was primarily due to the U.S.

Dollar weakening against the Euro, British Pound Sterling, and Polish Zloty, offset by the U.S.

Dollar weakening against the Taiwan Dollar, within the 26-week period ended June 28, 2025.

The $21.6 million currency gain recognized in the 39-week period ended September 27, 2025 was primarily due to the U.S.

Dollar weakening against the Euro and British Pound Sterling, partially offset by the U.S.

Dollar weakening against the Taiwan Dollar, within the 39-week period ended September 27, 2025.

During this period, the U.S.

Dollar weakened 12.4% against the Euro, 9.0% against the British Pound Sterling, and 12.8% against the Polish Zloty, resulting in gains of $49.1 million, $4.4 million, and $3.6 million, respectively, while the U.S.

Dollar weakened 12.2% against the Euro and 6.5% against the British Pound Sterling, resulting in gains of $46.5 million and $2.9 million, respectively, while the U.S.

Dollar weakened 7.8% against the Taiwan Dollar, resulting in a loss of $35.1 million.

The remaining net currency gain of $5.7 million was related to the impacts of other drivers, each of which was individually immaterial.

The $2.5 million currency loss recognized in the 26-week period ended June 29, 2024 was primarily due to the U.S.

Dollar strengthening against the Polish Zloty, Euro, and Australian Dollar, offset by the U.S.

Dollar strengthening against the Taiwan Dollar, within the 26-week period ended June 29, 2024.

The remaining net currency gain of $7.3 million was related to the impacts of other currencies, each of which was individually immaterial.

The $15.6 million currency gain recognized in the 39-week period ended September 28, 2024 was primarily due to the U.S.

Dollar strengthening against the Taiwan Dollar within the 39-week period ended September 28, 2024.

During this period, the U.S.

Dollar strengthened 2.6% against the Polish Zloty, 2.9% against the Euro, and 2.7% against the Australian Dollar, resulting in losses of $8.5 million, $6.2 million, and $2.9 million, respectively, while the U.S.

Dollar strengthened 2.8% against the Taiwan Dollar, resulting in a gain of $19.6 million.

1 unchanged sentence

Income Tax Provision

The Company recorded income tax expense of $135.7 million in the first half of 2025, compared to income tax expense of $116.4 million in the first half of 2024.

The effective tax rate was 15.6% in the first half of 2025, compared to 16.8% in the first half of 2024.

The decrease in effective tax rate between comparative periods was primarily due to increased tax benefits from stock-based compensation and increased releases of uncertain tax position reserves.

As a result of the above, net income for the 26-week period ended June 28, 2025 was $733.6 million compared to $576.6 million for the 26-week period ended June 29, 2024, an increase of $157.0 million.

The Company recorded income tax expense of $243.9 million in the first three quarters of 2025, compared to income tax expense of $203.6 million in the first three quarters of 2024.

The effective tax rate was 17.7% in the first three quarters of 2025, compared to 17.3% in the first three quarters of 2024.

The increase in the effective tax rate in the current period was primarily driven by the U.S.

tax deductions and credits.

As a result of the above, net income for the 39-week period ended September 27, 2025 was $1,135.2 million compared to $975.7 million for the 39-week period ended September 28, 2024, an increase of $159.5 million.

Liquidity and Capital Resources

2 unchanged sentences

Cash, Cash Equivalents, and Marketable Securities

As of June 28, 2025, we had approximately $3.9 billion of cash, cash equivalents and marketable securities.

As of September 27, 2025, we had approximately $3.9 billion of cash, cash equivalents and marketable securities.

Management invests idle or surplus cash in accordance with the Company's investment policy, which has been approved by the Company’s Board of Directors.

The investment policy’s primary objectives are to preserve capital, maintain an acceptable degree of liquidity, and maximize yield within the constraint of low credit risk.

Garmin’s average interest rate returns on cash and investments during the first two quarters of 2025 and 2024 were 3.2% and 3.3%, respectively.

Garmin’s average interest rate returns on cash and investments during the first three quarters of 2025 and 2024 were 3.2% and 3.3%, respectively.

The fair value of our securities varies from period to period due to changes in interest rates, the performance of the underlying collateral, and the credit performance of the underlying issuer, among other factors.

See Note 4 – Marketable Securities in the Notes to the Condensed Consolidated Financial Statements for additional information regarding marketable securities.

Cash provided by operating activities totaled $594.0 million for the first half of 2025, compared to $690.6 million for the first half of 2024.

The increase in cash received from customers primarily driven by higher net sales was offset by increases in cash paid for cost of goods sold and operating expenses, a strategic increase in inventory, as well as an increase in cash paid for taxes, resulting in a decrease in cash provided by operating activities in the first half of 2025 compared to the first half of 2024.

Cash used in investing activities totaled $246.1 million for the first half of 2025, compared to $143.2 million for the first half of 2024.

The increase was primarily due to an increase in net purchases of marketable securities in the first half of 2025 compared to the first half of 2024.

Cash used in financing activities totaled $415.7 million for the first half of 2025, compared to $285.7 million for the first half of 2024.

This increase was primarily due to higher purchases of treasury shares under the share repurchase plan, higher cash dividend payments, and an increase in the purchase of treasury shares related to equity awards in the first half of 2025 compared to the first half of 2024.

Cash provided by operating activities totaled $1,079.6 million for the first three quarters of 2025, compared to $948.6 million for the first three quarters of 2024.

The increase was primarily due to an increase in cash received from customers primarily driven by higher net sales, partially offset by increases in cash paid for cost of goods sold and operating expenses and a strategic increase in inventory in the first three quarters of 2025 compared to the first three quarters of 2024.

Cash used in investing activities totaled $513.8 million for the first three quarters of 2025, compared to $190.8 million for the first three quarters of 2024.

The increase was primarily due to an increase in cash used for acquisitions, an increase in net purchases of marketable securities, and an increase in purchases of property and equipment in the first three quarters of 2025 compared to the first three quarters of 2024.

Cash used in financing activities totaled $625.5 million for the first three quarters of 2025, compared to $449.4 million for the first three quarters of 2024.

Operating Leases

The Company has lease arrangements for certain real estate properties, vehicles, and equipment.

Leased properties are typically used for office space, distribution, and retail.

As of June 28, 2025, the Company had fixed lease payment obligations of $213.9 million, with $41.1 million payable within 12 months.

Leased properties are typically used for office space, distribution, data centers, and retail.

As of September 27, 2025, the Company had fixed lease payment obligations of $222.7 million, with $42.8 million payable within 12 months.

Inventory Purchase Obligations

The Company obtains various raw materials and components for its products from a variety of third party suppliers.

The Company’s inventory purchase obligations are primarily noncancelable.

As of June 28, 2025, the Company had inventory purchase obligations of $1,026.3 million, with $802.4 million payable within 12 months.

The Company’s inventory purchase obligations are primarily noncancelable commitments.

As of September 27, 2025, the Company had inventory purchase obligations of $922.8 million, with $683.1 million payable within 12 months.

Other Purchase Obligations

The Company’s other purchase obligations primarily consist of noncancelable commitments for capital expenditures and other indirect purchases in connection with conducting our business.

As of June 28, 2025, the Company had other purchase obligations of $417.0 million, with $206.3 million payable within 12 months.

As of September 27, 2025, the Company had other purchase obligations of $375.6 million, with $173.7 million payable within 12 months.

Other Uses of Cash

The Company estimates net cash outlays for income taxes in 2025 will be lower than previously anticipated, primarily as a result of the U.S.

tax legislation enacted during the current quarter, which changed capitalization requirements of certain research and development costs.

Critical Accounting Policies and Estimates

5 unchanged sentences

For a description of the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements, refer to Note 1, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 and “Critical Accounting Policies and Estimates” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

There were no significant changes to the Company’s critical accounting policies and estimates in the 13-week and 26-week periods ended June 28, 2025.

There were no significant changes to the Company’s critical accounting policies and estimates in the 13-week and 39-week periods ended September 27, 2025.

Quantitative and Qualitat ive Disclosures About Market Risk

1 unchanged sentence

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

There have been no material changes during the 13-week and 26-week periods ended June 28, 2025 in the risks described in our Annual Report on Form 10-K related to market sensitivity, inflation, foreign currency exchange rate risk and interest rate risk.

There have been no material changes during the 13-week and 39-week periods ended September 27, 2025 in the risks described in our Annual Report on Form 10-K related to market sensitivity, inflation, foreign currency exchange rate risk and interest rate risk.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis