Garmin 2001 Annual Report Download - page 31

Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Recent Accounting Pronouncements
In October 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets,” which is effective for fiscal years beginning after December 15, 2001. This new standard, when in
effect, will supersede SFAS Statement No. 121, “Accounting for the Impairment of Long-Lived Assets and for the Long-Lived Assets
to Be Disposed Of,” providing one accounting model for the review of asset impairment. Statement No. 144 retains much of the
recognition and measurement provisions of Statement No. 121, but removes goodwill from its scope. It also requires long-lived
assets to be disposed of other than by sale to be considered as held and used until disposed of, requiring the depreciable life to
be adjusted as an accounting change. Criteria to classify long-lived assets to be disposed of by sale has changed from SFAS Statement
No. 121, but these costs will continue to be reported at the lower of their carrying amount or fair value less cost to sell, and will
cease to be depreciated.
Statement 144 will also supercede the section of the Accounting Principles Board (APB) Opinion No. 30, which prescribes reporting
for the effects of a disposal of a segment of a business. This statement retains the basic presentation provisions of the opinion,
but requires losses on a disposal or discontinued operation to be recognized as incurred. It also broadens the definition of a
discontinued operation to include a component of an entity. This statement is not expected to have a material impact on our
financial statements.
In July 2001, the FASB issued Statement No. 143, “Accounting for Asset Retirement Obligations.” The objective of this statement
is to provide accounting guidance for legal obligations associated with the retirement of long-lived assets by requiring the fair
value of a liability for the asset retirement obligation to be recognized in the period in which it is incurred. When the liability is
initially recognized, the asset retirement costs should also be capitalized by increasing the carrying amount of the related long-
lived asset. The liability is then accreted to its present value each period and the capitalized costs are depreciated over the useful
life of the associated asset. This statement is effective for fiscal years beginning after June 15, 2002, and is not expected to have
a material impact on our financial statements.
In June 2001, the (FASB) issued Statement No. 141, “Business Combinations,” and Statement No. 142, “Goodwill and Other
Intangible Assets.” Statement No. 141 supercedes APB Opinion No. 16, “Business Combinations,” and FASB Statement No. 28,
“Accounting for Pre-acquisition Contingencies of Purchased Enterprises.” This statement requires accounting for all business
combinations using the purchase method, and changes the criteria for recognizing intangible assets apart from goodwill. This
statement is effective for all business combinations initiated after June 30, 2001. Statement No. 142 supercedes APB Opinion No. 17,
“Intangible Assets” and addresses how purchased intangibles should be accounted for upon acquisition. The statement also addresses
how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial
statements. All intangibles will be subject to periodic impairment testing and will be adjusted to fair value. This statement is
effective for fiscal years beginning after December 15, 2001, and is not expected to have a material impact on our business.
In June 1998 and June 1999, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards,
or SFAS, No. 133, Accounting for Derivative Instruments and Hedging Activities and SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities–Deferral of the Effective Date of FASB Statement No. 133. These statements require companies
to record derivatives on the balance sheet as assets or liabilities, measured at fair value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge
accounting. SFAS No. 133 was effective for our fiscal year ending December 29, 2001. The adoption of SFAS No. 133 has not had
a material impact on our financial condition or results of operations.
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