Garmin 2001 Annual Report Download - page 43

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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 2. Summary of Significant Accounting Policies (continued)
Intangible Assets
Intangible assets principally consist of costs incurred with certain licensing agreements totaling approximately $11,400 and $4,700
at December 29, 2001 and December 30, 2000, respectively. Licenses are being amortized over the lives of the related license
agreements, which are generally three years. Accumulated amortization is approximately $5,100 and $2,300 at December 29, 2001
and December 30, 2000, respectively.
Other intangible assets consist of patents as well as goodwill and other intangible assets acquired in the Company’s purchase of
Sequoia Instruments, Inc. in November 2001. The total purchase price of $3,625 was allocated to goodwill, developed technology,
and other intangibles. The purchase includes additional consideration of $1,000 contingent on the completion of certain activities
expected to occur in 2002 and thereafter.
Patents and other intangible assets are being amortized over the useful lives of the related assets, which is generally five to ten years.
Accumulated amortization is $391 and $204 at December 29, 2001 and December 30, 2000, respectively.
Investments in Debt Securities
Management determines the appropriate classification of marketable securities at the time of purchase and reevaluates such
designation as of each balance sheet date.
Debt securities not classified as held-to-maturity and marketable equity securities not classified as trading are classified as available-
for-sale. All of the Company’s marketable securities are considered available-for-sale at December 29, 2001. See Note 3. Available-
for-sale securities are stated at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive income.
During 2001, there were no significant unrealized gains or losses reported in other comprehensive income.
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 declines in value judged to be other-than-temporary
are included in net securities gains (losses). The cost of securities sold is based on the specific identification method. Realized gains
and losses on available-for-sale securities were not material.
Financial Instruments
GII has entered into interest rate swap agreements to modify the interest characteristics of portions of its outstanding long-term
debt from a floating rate to a fixed rate basis. These agreements involve the receipt of floating rate amounts in exchange for
fixed rate interest payments over the life of the agreements without an exchange of the underlying principal amount. The differential
to be paid or received is accrued as interest rates change and recognized as an adjustment to interest expense related to the
debt. The related amount payable to or receivable from the counterparty is included in other liabilities or assets. See Note 9.
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